Why Inflation Isn’t Sprouting in
Mr. Greenspan’s Neighborhood
Puny pay gains among union members make it hard to see how any upward
push on wages will gel among workers generally.
—BUSINESS WEEK, May 8, 1995, 30.
Shaking The Blue-Collar Blues
Even many who stayed in manufacturing lost ground when they were
squeezed out of lucrative union jobs, such as those in autos and steel.
Columbia’s Bloom says that in 1980 only 47% of high school graduates over
25 and 40% of dropouts held union jobs. By 1988 only 31% of graduates and
25% of dropouts were paying dues.
As membership dwindles, union settlements no longer piled up
wages at non-union shops. "The ethos that drove employers to treat
workers more or less equally has weakened," says Brookings Institution
labor economist Gary Burtless. With competitive pressures growing,
companies drove wages down.
—FORTUNE, April 22, 1991, 214.
Trucking Firms Find It Is a Struggle
to Hire And Retain Drivers
What caused truck drivers’ work lives to deteriorate, trucking
executives say, is cost-cutting forced by intense competition. After
deregulation opened truck routes to new entrants in 1980, carriers turned
to cheaper, nonunion drivers and employed no-frills trucks.
—WALL STREET JOURNAL, December 28, 1993, A1.
Today, though, workers may be receptive to labor’s renewed message,
coming as it does after two decades of wage stagnation and heightened
In the 1980s, for example, the 10-year average earnings of the bottom
fifth of male wage-earners plunged by 34%. Now more than half of families
say two members must work to make ends meet. And constant downsizing has
chewed away at pay and job stability, even among professionals…
If unions do regain power, Corporate America is certain to feel the
squeeze. With just a tenth of private-sector employees in unions today,
most employers have had a free hand to hold down labor costs.
Reunionization would force up pay and benefits, which typically are 20%
higher among union members…
Globalization and the growth of services, too, will continue.
Employers still have the upper hand in most unionization battles.
—BUSINESS WEEK, February 17, 1997, 56.
For Richer, for Poorer
It is a combination of lightly regulated labour markets and global
economic forces that has done much more than particular fiscal policies to
favour the rich over the poor.
In America and Britain, except at the very bottom of the income
distribution, wider wage differentials have been the most important force
behind increasing income inequality in recent years…
All countries have been buffeted by the forces of changing technology
and stronger global competition. So why should wage differentials in
most of continental Europe have changed by much less?
The answer is that deregulation in America and Britain has allowed
market forces to do their work, whereas in continental Europe powerful
trade unions, centralized wage bargaining and high minimum wages have
propped up the wages of the low-paid.
Indeed, pay differentials narrowed through the 1980s in western
Germany, where trade-union membership has held steady at around 40% of
workers over the past 20 years; in America, membership has fallen from 30%
to 12% since 1970. A study by Richard Freeman of Harvard University
confirms that, in general, wage inequalities are smallest in highly
—THE ECONOMIST, November 5, 1994, 19.