The Incredible Shrinking Worker Bargaining Power

New York capital and derivatives market lawyer Charles Davi penned an interesting article (“The Mystery of the Incredible Shrinking American Worker”] for The Atlantic this week attempting to explain why the share of national income going to American workers is declining.  The answer?  Microprocessors and container technology – which are really stand-ins for a globalized labor market and capital-biased technological progress.  Davi’s article demonstrates the excessive emphasis that flat-worlders place on trade and technology, their refusal to accept a role for democratic interdiction to raise wages and some of the biases inherent to neoclassical economics.

Source: EPI

Davi writes that falling American wages reflect the fact that “people are becoming less valuable to companies.”  This is a classic economics move that obfuscates the real issue.  People aren’t becoming less valuable, companies are just able to pay them less for the same service.  American workers are a lot more productive than they used to be, they just aren’t being compensated for it.  Why pay Chad $12/hour and offer him healthcare to be a Wendy’s grillmaster, when you could just as easily threaten to fire him when he talks back and offer him a good Thermaflu recipe your gramma used to use? This type of unsupported assumption – that labor markets are perfectly competitive so marginal workers are paid their marginal product (i.e. value) – smells like horseshit the second you set foot outside the classroom.

Davi also focuses almost exclusively on out-sourceable jobs and services operating within a globalized supply chain.  But guess what?  Manufacturing jobs represent less than 20% of American production, with services comprising almost 80%.  Some of those services are IT jobs and phone centers, but mostly they’re provided by janitors, security guards, fast food workers and retail clerks.  These jobs are not subject to foreign competition, companies like McDonalds, Starbucks and Macy’s are making boatloads of money, and their workers still aren’t seeing a dime.  Proponents of the flat-world, “we have to face the reality of global competition (so STFU with all that “raise” talk peon)” world view simply ignore the bulk of U.S. workers in their arguments.

Davi’s answer to the incredible shrinkage of workers’ national income share is, of course, to train workers and invest in better education.  These are noble goals, but the fact is that even college-educated workers have seen their wages grow slower than their productivity over the past 15 years.

Source: EPI

Nowhere does he, or any other technocratic hack, mention doing things that would clearly raise wages – increase the minimum WAGE (it’s in the name for god sake!), increase worker bargaining power by expanding workers’ rights, incentivize companies to create jobs in the U.S. and penalize those that don’t, provide universal healthcare to remove the growing health insurance costs eating away at take home pay etc…  There’s been ample demonstration over the last few decades that rising worker productivity does not automatically translate into wage increases.  For that, workers and the populace will have to directly fight corporate America for a just share of America’s bountiful but unevenly distributed pie.