October 24, 2006
Clarifying Some Points About Household Income Posted by Joshua Zeitz at 10:45 AM EST I think that Mr. Gordon is side-stepping some important issues. For purposes of clarification, let me address his recent post.
First, Mr. Gordon admits that while he touted the rise in compensation for workers engaged in manufacturing, he did not tell readers that the portion of workers employed in that sector has fallen from 34 percent in 1950 to 16 percent in 1995. “No, I didn’t tell the readers that,” he concedes. “And, to be flip, I also didn’t tell them that the capital of Montana is Helena. The percentage of the workforce engaged in manufacturing has nothing to do with whether manufacturing workers are being paid more now than at a previous point in time.”
I appreciate Mr. Gordon’s admission that his statement is flip. But his statement also misses the point. Unions remain particularly strong in the manufacturing and public-service sectors. By Mr. Gordon’s own admission, wages and compensation in these sectors are high. This information presents a strong argument in favor of unionizing low-wage service workers, who are increasingly replacing well-paid manufacturers. The thrust of Mr. Gordon’s original argument was that since compensation has risen over the past 50 years, workers are doing fine without unions. I’m suggesting that the numbers tell another story. Unionized workers are doing well; non-unionized workers, especially those without technical training or higher degrees, are doing less well.
Second, Mr. Gordon has side-stepped my argument about two-earner households. My point is that a rise in household income since 1950 should not necessarily be interpreted as a measure of increasing wages and compensation. If the average household in 2005 earns 50 percent more than the average household in 1950, but if the average household now has twice as many wage earners, then wages and compensation are not, in fact, rising. Families are keeping pace with inflation, or making gains in household income, by sending more people into the workforce. What this means in a world of soaring housing, health care and education costs, is that it’s becoming increasingly difficult for two-parent nuclear families to maintain middle-class status without both parents joining the workforce. Given the rising number of single-parent households, and the low rates of income growth among workers in the bottom quintile, unions have an important role to play in boosting wages and compensation across the board, so that families of whatever composition or character are able to avoid the so-called “two-income trap.”
I don’t doubt for a second Mr. Gordon’s regard for unions. But I don’t think his reply necessarily addressed the issues I raised, however clever and hip it is to be flip.
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