Capitalism, economy & financial well-being in America, Education, Jobs

Correlation Between Unionism and Wage Growth?

April 9, 2018

One of the things that seems to be plaguing our democracy is the discontent prompted by the slow to stagnant wage growth of the broad middle class of our society.  This while the economy is growing and the growth in the wealth of financial elite, ‘the 1%’, seems almost boundless.  This disparity is ongoing.  It is a major source of stress and discontent, discontent with the political elite who seem to encourage and support the trend.  This financial polarization is a major factor in the disfunction of our democracy.

It hasn’t always been this way.  It is a trend that seems to have started in the 80’s and become ever stronger.  This is also the timeframe when legislation and policy have been working against organized labor.  A prime example is the succession of Right-to-Work laws and open shop.  Post war the rise of unions has on balance been good for the country and democracy.  Yes, there have been issues of corruption and ties to organized crime, but I would suggest that all large institutions and organizations tend to work at self interest and have associated risk of corruption and malpractice.  Just look at our experience with state and national politics and the corrupt practices associated with political machines.

There needs to be balance in a power structure to ensure that fair and equitable compromises and outcomes can be achieved.  In this case we are talking about labor and the capitalist elite that manage our corporations.  Unions represent a balance to the power of corporate management to set wages and benefits.  The decades of weakening of organized labor, I believe, has had a direct impact on the current stagnation of middle class income.

Governments role is to ensure that capitalism is not allowed to evolve unchecked.  It needs to be balanced with the power of organized labor, equally constrained to minimize corruption.  Fixing this issue is not straight forward, however.  We operate as part of a global community and marketplace.  Sensitivity to competitiveness is critical.  Rising labor costs will increase the use of automation and technology to reduce labor content in a product and a resultant loss of jobs.  This does not mean that we have to starve labor.  It means that we must work harder to create new higher skill jobs and invest in education and training to supply the workers to take on these jobs.

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