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

The N.C. Budget and Tax Center reported recently [1] 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 [2] 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 [3], 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 [2]and the full report by clicking here [3].