June 13, 2012
Harold Meyerson has a good column on the impact of the decline in unionization on the middle class. However he makes a mistake in saying the the labor share of income has only declined in the United States and crisis countries in the euro zone. Actually, if we go back to 1980, the labor share of income has declined pretty much everywhere in Europe, although there are differences across countries. In many countries the decline in labor shares has been larger than in the United States. (Meyerson’s comparison of 2001 and 2011 is misleading because 2001 was a cyclical peak for labor share in the U.S.)
Meyerson also blames the reduction in wages for ordinary workers on globalization. This is somewhat misleading. We could have designed trade policies that focused on opening up the most highly paid professions (e.g. doctors, lawyers, economists) to more international competition. This would have driven down wages in these professions and led to higher living standards for ordinary workers since the services they provide would cost less.
Instead policymakers have adopted policies that were designed to put manufacturing workers in direct competition with low-paid workers in the developing world. These policies would lower their wages, making doctors, lawyers, and economists richer in addition to owners of capital.
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