Friday, December 19, 2014

Econ Obvious 101

Robert Reich: The Reagan revolution is killing America’s middle class -

...One factor here has been a sharp decline in union membership. In the mid 1970s, 25 percent of the private-sector workforce was unionized.

Then came the Reagan revolution. By the end of the 1980s, only 17 percent of the private workforce was unionized. Today, fewer than 7 percent of the nation’s private-sector workers belong to a union.

This means most workers no longer have the bargaining power to get a share of the gains from growth.

Another structural change is the drop in the minimum wage. In 1979, it was $9.67 an hour (in 2013 dollars). By 1990, it had declined to $6.84. Today it’s $7.25, well below where it was in 1979.

Given that workers are far more productive now – computers have even increased the output of retail and fast food workers — the minimum wage should be even higher.

By setting a floor on wages, a higher minimum helps push up other wages. It undergirds higher median household incomes.

The only way to grow the economy in a way that benefits the bottom 90 percent is to change the structure of the economy. At the least, this requires stronger unions and a higher minimum wage...

No comments: