Stagnant Wages, New York Times, and Unions

Stagnant Wages, New York Times, and Unions

The 1/10/18 NYTimes article, Where Did Your Pay Raise Go? It May Have Become a Bonus by Patricia Cohen takes note of the long term trend of corporations awarding employees bonuses instead of pay raises. Here is the story in one chart:

Bonuses vs pay raises 1980-2108 NYTimes-01102018

The NYTimes explains this phenomenon based on corporations reacting to the challenges of the last recessions and the need for greater flexibility, the catch all excuse for almost every corporate action that increases their power vis-a-vis their employees1 No surprise the article reports:

If given a choice, most workers would take a raise. When Aon Hewitt asked 2,079 American workers in a second, newly completed survey what they would like to see their employers do with their tax-cut windfall, 65 percent chose a pay raise — twice as many as any other option, including a bonus or a 401(k) contribution.

Takisha Gower, a passenger service agent for Envoy, the air carrier that was previously known as American Eagle and is owned by American Airlines, welcomed her recent $1,000 bonus, which the company credited to the “new tax structure.” She is much more concerned, however, about her base pay week to week, a subject of longstanding contract negotiations.

“It was appreciated, but it doesn’t fix the long term,” Ms. Gower said of the bonus. “We need a livable wage that we can support our families off.”

“A lot of employees qualify for government assistance,” she added. “Some have to work 60 hours a week to make ends meet.”

The fact of the matter is that corporations have not and will not share the long-term productivity gains experienced in the economy except in the most grudging and self-serving manner.

Prodiucity growth vs wages 1973 to date

 

Any Other Explanations ??

Mysteriously the article does not point out the connection between the collapse of unions in the private sector and the stagnation of wages and salaries. An individual has virtually no bargaining power with corporations. They can and will pay as little as possible because they can. The individual is in a take it or leave it bargaining position. Unions long provided the leverage to drive better wage and workplace condition bargains exactly because corporations did have to bargain. And, there is evidence to show that union led wage scales buoyed those for the non-unionized worker. Here is a chart showing the rate of unionization since WWII:

One might note that the very same early 1970s that marks the beginning of our more than four decades of real income stagnation and even decline for some sectors of the working and middle classes lines up with the decline in unionization.

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Also published on Medium.

Footnotes

  1. Of course, the parallel rise of the non-employee gig worker falls into the same category.

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