New report: The decline in worker bargaining power is behind falling wages

The N.C. Budget and Tax Center reported recently that while North Carolinians are working harder than ever, most are not reaping the benefits economically. The report points to the “off-shoring” of jobs as a major contributor to soaring income inequality.

Yesterday, Senior Economist John Schmitt of the Center for Economic Policy Research reported similar findings on the national level; American workers are better and more productive than ever.

“The workforce today is more experienced, much better educated, and working with more –and better– capital. Largely as a result, GDP per capita was 63 percent higher in 2010 than it was in 1979.”

Schmitt’s report, however, points to parallel and closely related contributing cause for growing wage and income inequality: the decline in worker bargaining power.

“But, over the same period [1979 to the present], the bargaining power of US workers has eroded considerably. Only about 7 percent of private-sector workers are in unions today, compared with almost 25 percent in the 1970s. The inflation-adjusted value of the minimum wage is down more than 15 percent compared to 1979 (and down even more compared to its historical high point in 1968). We’ve deregulated previously well-paying industries (trucking, airlines, telecommunications); privatized many state and local government jobs (school bus drivers, cafeteria workers, and many others); signed trade agreements that put US workers in direct competition with low-wage workers overseas; created an immigration system that deprives immigrants of even the most basic protections while simultaneously putting the squeeze on US-born workers; tolerated a boom in wage theft and related bad behavior by employers; and, almost without exception, pursued macroeconomic policies that have kept unemployment high and jobs scarce.

So, it isn’t surprising that most Americans probably don’t get just how much richer we really are.”

You can read the blog post summary by clicking here and the full report by clicking here.

42 Comments

  1. [...] Budget and Tax Center showing the link between loss of rights and wage decline in North Carolina. New report: The decline in worker bargaining power is behind falling wages • It appears that Richard Burr thinks Marco Rubio needs a little more time before seeking [...]

  2. Frank Burns

    August 1, 2012 at 9:49 am

    Certainly offshoring of jobs is a big problem for us for many reasons, including product quality and the condition of our economy. Unionizing labor would make the situation worse. Union labor costs are 40 to 50% higher than non union labor. In addition there are productivity losses for union labor. This loss in productivity and higher labor cost will just drive more jobs elsewhere.

  3. Jeff S

    August 1, 2012 at 11:12 am

    Yes, the system seems to be working as-designed.

    Corporations accumulate billions in overseas tax shelters; post record profits; convince the people of this country that it’s in their best interest to sacrifice to make next quarter even more profitable.

  4. david esmay

    August 1, 2012 at 11:46 am

    The right-wing corporate talking point that unions are the problem doesn’t hold water Frank. Unions make up only about 11% of the workforce and the number of union workers is at a 70 year low. With today’s automation and robotics, labor comprises just 7% of the cost of manufacturing, so labor is not the problem. Where mfg. goes so does high tech design and engineering, and the small businesses that supported the 60,000 factories that closed during the Bush administration. American companies have been manufacturing overseas and then rebuilt their domestic business around marketing and selling their products here, which is still supply-side b.s.. American jobs are now centered around low wage retail and service, where low wages are supposed to be off set by low prices, but in the end, what we’ve seen is no jobs and no buyers at any price. The only way this is going to change, and the right will severely oppose this, is a national industrialization plan like Germany’s, where Business, Government, and Unions work together. They have much higher wages and taxes, 25-30% unionized, and they give exporters an 18% rebate on export sales. The rest of the world has such rebates and all countries with trade surpluses have nationalized health care, whose cost is far less and not all costs are transferred to the cost of goods. I know the first thing you’re going to say is “but look at Europe’s economic woes!”. Their main problem is a unified currency, biggest mistake they ever made, and that’s why our situation is completely different.

  5. david esmay

    August 1, 2012 at 11:50 am

    And by the way, Thomas bus here in High Point has a lot UAW members, and they’re booming. Just finished a new 39 million dollar plant.

  6. Alex

    August 1, 2012 at 1:33 pm

    I saw an interesting statistic today. There has not been one single day in the Obama years where as many people were working as during the worst year in the Bush administration . When you consider all the additional folks coming into to the work force since Bush, you get an idea of how lousy this “recovery” has been in spite of trillion dollar stimulus, payroll cuts, etc. What a mess we have !

  7. david esmay

    August 1, 2012 at 2:09 pm

    I read an interesting article today, William Gale, conservative economist at the Brookings Institute argues against austerity and for another stimulus.
    http://www.money.cnn.com/2012/08/01/news/economy/stimulus-deficit/index.htm?source=cnn_bin
    When the economy dumped 740,000 a month at the height of Bush’s recession, recovery from eight years of GOP mismanagement wasn’t going to happen over night. Yet in spite of repub obstruction more net jobs have been created in the last 3 1/2 years than the previous 8 under Bush

  8. gregflynn

    August 1, 2012 at 2:30 pm

    Once again Alex you are lying through your teeth. The total nonfarm payroll employment number for April 2012 was 132,931,000. The same month 2003 during the Bush administration it was 129,849,000.

  9. Frank Burns

    August 1, 2012 at 2:57 pm

    David, I have no explanation why unions seem to work in Europe but not here. Maybe corruption has something to do with it, I don’t know.

  10. Alex

    August 1, 2012 at 5:16 pm

    greg, I guess we can believe you and not the Wall Street Journal which gave this statistic.What a piece of work !

  11. gregflynn

    August 1, 2012 at 5:47 pm

    I get my statistics direct from the Bureau of Labor Statistics. There’s even a handy dandy graph.

  12. Doug

    August 1, 2012 at 6:51 pm

    The thing I can’t figure out is why david and greg, the small letter twins , insist on defending Obama’s economic record when it’s pretty darn lousy, and probably won’t get much better if he is re-elected. There is really nothing to drive job growth upward, and there is nothing proposed that will stop the flow of red ink.So why are the sheep blindly supporting this guy ? I would love to know.

  13. Frances

    August 1, 2012 at 7:02 pm

    Here’s a few facts:

    In spite of the media and Obama administration BS about how the unemployment picture is “improving” There are 572,000 less people working now then when Obama took office. You can play with unemployment numbers — by simply not counting people who stopped receiving unemployment benefits for example — but you can’t play with that number. Not only are there 572k more people out of work, but in 3.5 years there hasn’t been a single job created to keep up with population growth.

    We now have the lowest percentage of the adult population working than at any time in the past 25 years.

    The 30 worst months of unemployment in the past 25 years all happened while Obama was president.

    Over 1 million people have completely given up looking for work since Obama became president.

  14. gregflynn

    August 1, 2012 at 7:12 pm

    DougAlex, I call BS when I see it. Even the beloved Wall Street Journal will tell you that the number of private-sector jobs in the U.S. economy is higher than the month Obama took office. By comparison, at this point in Bush’s term there were fewer private-sector jobs than when he took office. On the other hand, the public-sector had expanded under Bush, while it has contracted under Obama. If you want to shrink government and grow the private sector, Obama’s your man.

  15. Frank Burns

    August 2, 2012 at 6:28 am

    Frances makes a good point, look to the bottom line when judging Obama’s failures.

  16. Alex

    August 2, 2012 at 7:42 am

    The Wall St. Journal will also tell you greg that most of the jobs created under Obama are nothing but low paid service jobs many of which are part-time or contracted. Also, many of the jobs have now gone away once the borrowed stimulus dollars gave out. You can put lipstick on the pig greg, but the numbers don’t lie.

  17. gregflynn

    August 2, 2012 at 7:59 am

    Obama

    Government
    2009 Jan 22,576,000
    2012 Jun 21,943,000
    Loss — 633,000

    Private
    2009 Jan 110,985,000
    2012 Jun 111,145,000
    Gain — 160,000

    Total
    2009 Jan 133,561,000
    2012 Jun 133,088,000
    Loss — 473,000

    Bush

    Private
    2001 Jan 111,631,000
    2004 Jun 109,841,000
    Loss — 1,790,000

    Government
    2001 Jan 20,835,000
    2004 Jun 21,601,000
    Gain — 766,000

    Total
    2001 Jan 132,466,000
    2004 Jun 131,442,000
    Loss — 1,024,000

  18. gregflynn

    August 2, 2012 at 8:06 am

    The “percentage of the adult population working” is a contrived statistic that does not reflect the labor market and does not reflect unemployment. It has been steadily declining as more baby boomers retire and more young people enter college.

  19. Frank Burns

    August 2, 2012 at 8:26 am

    Jobs have never been a focus of Obama, he was focused on Obamacare and other forms of increasing government control of our lives. Obama thinks the private sector is doing just fine, he also stated that “they didn’t build that”, which indicates to me that he has a major misunderstanding of private enterprise. We most certainly need change from Obama!

  20. gregflynn

    August 2, 2012 at 8:32 am

    Obama was talking about publicly funded infrastructure. You know that but that doesn’t stop you perpetuating the lie. The numbers don’t lie. The private sector has expanded under Obama.

  21. Frank Burns

    August 2, 2012 at 9:18 am

    Greg, I don’t believe you and you are just perpetuating the Obama talking points. I saw Obama on the video, I heard the obvious disdain dripping in his voice against buisness owners. If you believe the private sector has expanded under Obama, you are not dealing with the real world. He has you brainwashed. You can’t count an increase in low end jobs and state that the private sector is doing fine.

    We need to bring back manufacturing to this country and that takes a concerted effort of government leaders, and Obama has shown no inclination to lead. He himself coined the term, “leading from behind”. Nobody leads from behind, you have to lead from the front. Obama has always abdicated leadership to the Dems in Congress. That didn’t work too well. Here in NC we had the misfortune of having a Governor and a President who couldn’t lead themselves out of a paper sack.

  22. gregflynn

    August 2, 2012 at 9:33 am

    Newsflash: US manufacturing sector jobs have been in decline for 45 years.

  23. Ricky Leung

    August 2, 2012 at 9:39 am

    Here in NC we had the misfortune of having a GOP dominated General Assembly and a Congress who spend more time on telling us what we cannot do (vote early, get married, women having control of their own reproductive lives, etc…) than actually doing anything that would create jobs.

    I’m not holding out Obama to be a hero of any sort, but the alternative is… well… O_o

  24. gregflynn

    August 2, 2012 at 9:41 am

    Newsflash: Obama “shows inclination” to lead on manufacturing:

    Tonight, I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last -– an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.
    —–
    Now, this blueprint begins with American manufacturing…

    – State of the Union, 1/24/2012

  25. Frank Burns

    August 2, 2012 at 9:47 am

    Newsflash! Americans are not quitters. Greg implies that since we have been losing manufacturing for 45 years, we should surrender and not attempt manufacturing ever again. The problem with that approach is we end up with junk made in other countries. Motors that don’t last a year or two on fans or dishwashers. I believe consumers would be willing to pay more for quality products that were made in the US. It will need the focus of our leaders to turn it around.

  26. gregflynn

    August 2, 2012 at 9:54 am

    Factcheck: “Leading from behind” is NOT a term coined by Obama. It was a reference to foreign policy and specifically actions in Libya. It was about getting the job done without necessarily getting credit for it. It first appeared a year ago in a New Yorker article:

    One of his advisers described the President’s actions in Libya as “leading from behind.” That’s not a slogan designed for signs at the 2012 Democratic Convention, but it does accurately describe the balance that Obama now seems to be finding. It’s a different definition of leadership than America is known for, and it comes from two unspoken beliefs: that the relative power of the U.S. is declining, as rivals like China rise, and that the U.S. is reviled in many parts of the world. Pursuing our interests and spreading our ideals thus requires stealth and modesty as well as military strength. “It’s so at odds with the John Wayne expectation for what America is in the world,” the adviser said. “But it’s necessary for shepherding us through this phase.”

  27. Frank Burns

    August 2, 2012 at 9:55 am

    And…… it will take deeds not just words. Obama says a lot, he sure talks nice, very soothing to some and sounds like a preacher to others, but his results are lacking substance. You have to roll your sleeves up, and get your hands dirty, not just turn everything over to the Dems in Congress. Here’s another clue for Obama in his future endeavors, he will need to work with people who disagree with him and search for compromise.

  28. Frank Burns

    August 2, 2012 at 10:00 am

    Not only is it at odds with John Wayne, leading from behind is at odds with any form of leadership anywhere. It doesn’t work. I suggest Obama take a leadership course at night and it will help him in his next job doing something useful.

  29. gregflynn

    August 2, 2012 at 10:05 am

    Dearest Frank, I was VERY careful to state that US manufacturing sector JOBS have been in decline, not the manufacturing sector itself. We have an amazing manufacturing sector that has been extraordinarily successful at eliminating the need for people in the manufacturing process. And, for labor intensive manufacturing, the amazing free market has shipped those jobs overseas. Don’t believe me? Ask Mitt Romney?

  30. Frank Burns

    August 2, 2012 at 10:14 am

    Indeed it has, but quality of products has suffered as well. In the interest of product quality and product life, I believe consumers would be willing to pay more for American made products. We need to stop paying so much attention to people who have MBA’s and give the consumer quality products which is what they want. I know I’d pay more for a dishwasher that lasts more than 5 years, and men’s shirts that don’t wear out at the elbows in 2 years.

  31. Ricky Leung

    August 2, 2012 at 11:59 am

    You have to be kidding me. I’m all for paying more for local products, but the idea that just because something is American made that it is somehow better? The only reason quality of products could have suffered is because the CEOs of those companies made a conscious decision to place profits over quality. If the CEOs of big businesses could exploit American labor as much as they exploit overseas labor, they would hop on that wagon in a heartbeat. The main reason we even have any kind of product quality from American made goods at all is because of government regulatory control over working conditions and consumer protections. Both of which are things you are against, Frank.

    If the private sector has its way without government oversight on behalf of workers and consumers, we would be eating plastic for rice and poisoning our babies with fake baby powder.

    Besides, on another money-making note, everything produced by big businesses were made for the trash. This is how electronics are designed for the dump” http://www.storyofstuff.org/movies-all/story-of-electronics/ But it fits for most products.

  32. Frank Burns

    August 2, 2012 at 12:30 pm

    Ricky,
    You apparantly haven’t heard about the poor products being produced in Red China. Yes American manufacturing is better than products made in Red China with scads of government oversight. Certainly Red China produces products at less cost, but they are junk. The same is true for poor production in India and other countries in the East. The clothes are shoddily made, the products were much better quality when they were US made. Yes there has been a tradeoff with quality over cost but I think there would be a demand for quality made products here. Nobody makes furniture better than NC furniture manufacturers.

  33. Ricky Leung

    August 2, 2012 at 12:46 pm

    Sorry, Frank. I thought you actually know about international news and would know that I was actually referencing products (rice and baby powder) from what you call “Red China.” (Which is a little insulting and xenophobic, btw.)

    And I thought that you would also pay attention to what I said. Which is that regulatory control over working conditions and consumer protections prevents much of the shortcuts in American produced goods. That same regulatory control is what make corporations ship their production overseas, because they can get away with shoddily made products there.

    Of course there is demand for quality made products, but that doesn’t make corporations as much profit. So we have shoddily made stuff, so corporations can trap us in a cycle of having to purchase new things every few years. If they made a quality product that lasts for a long time, they can’t get you to buy it again.

    For the private sector, it’s all about profits that exploits the environment, workers, consumers… unless we do something about it.

    Here’s a video explaining the story of stuff:

    http://www.storyofstuff.org/movies-all/story-of-stuff/

  34. Alex

    August 2, 2012 at 1:05 pm

    The Progressive’s favorite economist, Dean Baker, said yesterday that slow or no growth at all will probably continue all the way through 2014, and unemployment will continue to inch upward towards 9 or 10%. Not a pretty picture he says ! The only change we’ve got now is going from bad to worse.

  35. Frank Burns

    August 2, 2012 at 1:32 pm

    Ricky,
    I’m glad to see that you recognize the problem with products made in Red China (I don’t know why you consider that insulting, its meant to distinguish Communist China from Free China – Taiwan). In addition to the baby powder, and dog food, in the construction business we encountered shoddy wall board made over there. Like I reminded you, a communist country has more oversight than NC has barbeque and its not working. The products are still garbage.

    My point is to increase manufacturing over here with the selling point of quality products over the poor products being produced elsewhere. I’m sure government could help if there is a focus nationally on American made goods. Quality made products can be done without government oversight, just so you understand, its been done for a long time. Most government intervention just drives costs up. Government should be a facilitator not an intervenor. The idea that private industry exploits workers is something that communists believe in, and its just not true. Believe it or not, private industry does not need government help. Government just sets the boundaries, then it needs to get out of the way.

  36. gregflynn

    August 2, 2012 at 1:37 pm

    No surprise that Alex can’t get the facts right. Baker was being interviewed about the Federal Reserve’s inaction partly due to the growth of 160,000 private sector jobs.

    But Dean Baker, co-director of the Center for Economic and Policy Research, is “at a loss to understand what exactly they’re waiting for.”
    Noting the Fed’s own forecast that economic growth will remain tepid (at best) and the unemployment rate will come down “only slowly,” Baker says “it’s a little hard to understand” why the Fed didn’t move at Wednesday’s meeting. “They’re sorta saying they’re prepared to do something if it’s needed – well, it sure looks like it’s needed.”

  37. Ricky Leung

    August 2, 2012 at 2:16 pm

    If you want to distinguish China from Taiwan, you can use the official terms. The People’s Republic of China (PRC), and the Republic of China (ROC).

    Oversight in the PRC is ineffective because it is decentralized across multiple departments. With a strong centralized federal government that represents and protects the people, free from corporate manipulation, we can achieve a safer society for both workers and consumers.

    The idea that private industry exploits workers is a historic and modern fact, re: the Transcontinental Railroad and the Chinese laborers; the Triangle Shirtwaist Factory fire of 1911 in New York; the Alaskan Cannery workers in the 1920s and 1930s; and the poultry industry in NC(http://www.charlotteobserver.com/poultry/) in our current times, among others.

    Believe it or not, without government and proper enforcement to protect the people (and it certain can and should do a better job), there would be (and sometimes there still is) unequal pay and mistreatment of workers and environment harms to not only consumers, but everyone who lives on Earth.

  38. Alex

    August 2, 2012 at 2:23 pm

    As usual, Greg gets the facts wrong ! If you go back and read the article thoroughly, Baker says exactly what I said in my previous comment. I would hate to rely on him as a reporter !

  39. gregflynn

    August 2, 2012 at 2:24 pm

    Tell you what Alex. Provide a link to back up your claim.

  40. gregflynn

    August 2, 2012 at 2:30 pm

    Here’s what I’m reading Fed Hints at More Action: “What Are They Waiting For?” Dean Baker Asks
    He did NOT say “no growth”. He did NOT say “continue to inch upward towards 9 or 10%”. Those parts are your spin.

  41. Alex

    August 2, 2012 at 9:55 pm

    Unfortunately, greg gets so confused with his facts that he completely misses the entire point of the article- namely that without federal intervention the Obama economy is essentially on life support with little chance of getting any better. We’ve tried this solution now for two years with little improvement, and simply ran up another two trillion dollars in deficits. Simply put , we are printing phony dollars, and then using them to buy our own debt. This has devalued our dollar, ruined our savings yields, and run up high prices for all commodities essentially declaring war on the middle class and putting a huge burden on our seniors..

  42. gregflynn

    August 3, 2012 at 9:23 am

    Alex, you’re stuck in the Sisyphean task of perpetually moving goalposts.