October 23, 2006
More on the Wagner Act III Posted by Joshua Zeitz at 06:15 PM EST Mr. Gordon raises some important points, which I’ll address one by one. 1) First, the rise in median income for those involved in manufacturing may well have increased by 33.8 percent in real dollar terms between 1950 and 1999, but what Mr. Gordon doesn’t tell readers is that the portion of employed workers engaged in manufacturing has declined from 34 percent in 1950 to 16 percent in 1995. According to the Bureau of Labor Statistics, in 2005 about 27 percent of all workers engaged in manufacturing were members of, or represented by, labor unions, compared with just 16.3 percent of private-sector employees across the board. Which is to say, wages and compensation in manufacturing have risen since 1950 because of unions; that fewer Americans are now engaged in manufacturing, and that unions are being aggressively blocked from organizing workers in key private-sector service industries, which account for most jobs in the twenty-first-century economy, only strengthens the case for unions. 2) Mr. Gordon distinguishes between wages and income. This is a good point. Between 1967 and 2005 household income (in real, CPI-adjusted dollars) for the first, second, third, and fourth quintiles increased by 34 percent, 25 percent, 32 percent and 48 percent respectively. But these figures mask a major structural change in the economy. In 1950 only 20.4 percent of working-aged women were in the labor force; today, that figure is roughly 60.5 percent for married women and 65.9 percent for single women. Since 77.1 percent of married men are also employed today, we can state with some certainty that in most households with two married adults, both spouses work. This means that household income has risen, but only because more people in each household are participating in the workforce. It doesn’t mean that wages and compensation have continued to rise in the growing service sector. 3) Mr. Gordon has bemoaned the deficiencies of the CPI in past posts, but since the Census Bureau serves up its real numbers using the consumer price deflator, so have I.
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