Here are the headlines to four stories that were published last week in The Wall Street Journal, The Washington Post, and The New York Times:
“Wall Street Traders Are Having Their Best Year Ever,” in Wednesday’s Journal
“U.S. Stocks Rise Within 0.5% of Their Record, Even as Oil Prices Keep Climbing,” in Wednesday’s Post
“U.S. Workers Are More Productive Than Ever. A.I. Isn’t the Key,” in Tuesday’s Times
“Americans’ Wages Have Barely Budged Since Trump Took Office,” in Wednesday’s print edition of the Post
If there’s a problem with the American economy, it’s only because some people have to work for a living. Income from investment—the primary source of income for roughly 1 percent of Americans—is soaring. The remaining 99 percent, who depend primarily on income from their work, are the laggards grousing about prices and necessities that may be out of reach.
Of all the other indices from which wages are decoupled, it’s productivity that poses the immediate question, at least in conventional economics. Since “workers are more productive than ever,” then according to traditional economic folk wisdom (which many economists prefer to call economic “laws”), wages should not be refusing to “budge,” but should be rising in tandem with productivity. By the mid-1990s, however, two economists at the Economic Policy Institute (EPI president Larry Mishel and Jared Bernstein, who went on to become chair of the president’s Council of Economic Advisers under Joe Biden) documented that around 1980, productivity continued its merry ascent while wages began lagging farther and farther behind.
In consequence, while the labor share of the national income was roughly 65 percent during the 20 years following World War II, according to a recent report from the New York Federal Reserve Bank, it then began a steady decline to its current 54 percent.
To a significant degree, the increases in productivity have come from replacing humans with machines, which has tended to reduce costs and increase revenues for the companies that have done the replacing. But that in itself doesn’t explain why the remaining workers have generally not seen their wages rise along with these productivity gains, which have gone primarily to investors in the form of dividends and stock buybacks.
One major exception to that rule, which illustrates another crucial factor in the shift from labor income to capital income, is visible every day at America’s ports. Until the 1960s, every major port employed many thousands of workers who lifted ships’ cargoes in nets they moved from the ships’ holds to the docks, or from the docks to the ships. Then the containers arrived, which could be lifted by massive newfangled cranes and placed onto big-rig trucks and railcars. That reduced the number of longshore workers needed to load or unload a ship by roughly 90 percent.
Harry Bridges, president of the West Coast International Longshore and Warehouse Union (ILWU), concluded that fighting containerization would be a long battle that the union would ultimately lose. Nonetheless, the ILWU was a legendarily militant union that could close down the ports—and the nation’s exports and imports—at a moment’s notice. Bridges leveraged that power to craft a historic deal with the port and shipping companies: The workers who remained after the coming of containers, who worked those cranes and directed the ports’ traffic, would share in the greatly enhanced proceeds that the companies derived from this epochal transformation of work. In consequence, the workers who lost their jobs received generous settlements, while the remaining workers became, and remain, the highest-paid blue-collar workers in America.
Most American workers didn’t belong to a union with the power to craft such deals; indeed, most didn’t belong to a union at all. Since the end of the 1970s, virtually all American corporations have done everything they could to weaken their workers’ power to increase their income, while they and their investors enjoyed increases in profits, dividends, and buybacks. Corporations have routinely offshored production, reclassified employees as independent gig workers, and broken what’s left of the nation’s labor laws to keep their employees from forming or joining unions.
Last week, EPI released a study showing that if the American workforce were still unionized at roughly the 30 percent share it was at in the decade following World War II, the median American worker would have 14.5 percent higher wage income, which translates into roughly $7,700 more annually than the current level. Getting anywhere near that level of union representation would require a wholesale rewriting of labor law so that it once again enabled workers to join unions without fear of being fired for supporting an organizing drive (which is nominally illegal, but which incurs so minimal a penalty on employers that virtually every employer begins sacking workers as soon as they hear of such activities).
Going back to the Great Society days of Lyndon Johnson, every time the Democrats have controlled the House, Senate, and White House, legislation strengthening workers’ right to organize has passed the House and failed to get the required 60 votes in the Senate. It’s clear that Democrats would have to scrap the Senate’s 60-vote cloture requirement if they’re ever going to restore workers’ rights.
The advent of AI, of course, has highlighted not only the possibility of mass unemployment but also the growing impossibility of boosting workers’ share of both corporate and national income. After all, the very same oligarchs spending hundreds of billions of dollars on developing AI are the oligarchs who’ve done everything in their power to keep their workers from organizing, and who are even now funding the campaigns to defeat higher taxes on capital income and wealth.
Lately, in an online chat group I’m part of, I’ve seen some certifiably left economists propose to address the ongoing decline of workers’ income through legislation that would entitle the general population to a share of the nation’s investment income. Sometimes explicitly, sometimes not, they’ve given up on the prospect of boosting wage income, either because they think AI will eliminate tens of millions of jobs, or because they don’t think unionization on the scale required to make a difference is politically possible, or because they believe our oligarchs might accept a share of their profits dribbling down to the general public once the specter of unions and disconsolate workers no longer needed to concern them at all.
I have my reservations about that analysis. I don’t think the same oligarchs, or their oligarchic ilk, will look any kinder on sharing what would be their income with the citizenry than they would on sharing it with their workers. I think any such sharing will require massive political pressure from, if not the 99 percent, then at least the 90 percent of Americans whose investment and work income falls short of providing an American Dream life. Be they workers or be they citizens, whether pre-distribution or redistribution, what will be required will be mass organizing on a scale not seen since the 1930s and ’40s, if not greater than that. For now, that still requires organizing at worksites, as well as online, at meeting halls, on street corners, as workers and as citizens. And that would only be the beginning.
