October 23, 2006
More on the Wagner Act II Posted by John Steele Gordon at 03:05 PM EST I don’t doubt for a second that there have been violations of the spirit and even the letter of federal labor law in recent years. But I am equally sure that there always have been. It’s just that recently these have tended to benefit management whereas in times past they often benefited labor. There were times during the era of Democratic dominance when the National Labor Relations Board was a wholly-owned subsidiary of the AFL-CIO and the motto for management there was “abandon hope all ye who enter here.”
I am not familiar with the particular instances cited by Mr. Zeitz, so I can’t comment, although I must wonder if they are quite as open-and-shut violations of the law as he reports them.
He writes, “But I hope he won’t deny the equally powerful truth that wages have fallen concurrently with union membership. In real terms (inflation-adjusted 1982 dollars), weekly earnings have fallen from $302.52 in 1964 to $277.57 in 2004. What good is a robust economy to workers, if wages are falling?”
It is important to distinguish between “wages” (cash income) and “compensation,” which includes fringe benefits such as health insurance, pensions, unemployment insurance, vacation time, FICA taxes, etc. Non-cash income almost quadrupled as a percentage of total compensation between 1950 and 1995, so comparing wages alone does not give a fair picture. The Historical Statistics of the United States reports that the median income (i.e. compensation) in manufacturing (in 1997 dollars) was $21,981 in 1950, and $29, 411 in 1995, a 33.8 percent increase.
There is also the problem of measuring inflation and taking it into account in comparing past and present wages. Most economists think the Consumer Price Index, the main means of measuring inflation, overstates true inflation by at least one percentage point per year. David Henderson, an economist at the Hoover Institution, writes, “Assuming this minimum 1 percentage point bias for every year since 1973, real hourly wages since 1973 have actually increased by about 9.5 percent and real employee compensation since 1980 has increased by about 25 percent.”
By almost every measure one can think of, the standard of living for average families has been increasing, not decreasing, as would have to be the case if income had fallen 8.2 percent, as the wage statistics Mr. Zeitz cites would indicate. The average new house in 1960 had 1,400 square feet. By 2000 the average square footage was 2,100. Such things as air conditioning and dishwashers were found in fewer than 20 percent of houses in 1960. Today air conditioning is in over 70 percent and dishwashers in over 50 pcrcent. The number of two-car families has grown enormously. Not to mention things that didn’t exist in 1960: modern TV’s, cell phones, microwave ovens, etc., etc.
But statistics don’t give the whole picture. As a meteorologist once said, it’s always a good idea to look out the window before making a forecast. The United States today is a vastly more prosperous country than it was 40 and 50 years ago, and that prosperity reaches ever further down the socioeconomic scale. One need only walk the streets of American cities and suburbs to see that.
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