With Unemployment So Low Why are Wages Stagnant? 

Photo by Paul Sableman | CC BY 2.0

If the unemployment rate is so low why have wages for most Americans failed to go up very much recently?  The simple answer is for the very same reasons why economic inequality and social mobility in America has largely ground to a halt in the last 40 years–the decline and war on labor unions.

Last Friday the Labor Department announced that the unemployment rate dropped to 3.9%–the lowest rate since the 1990s.  Yet with this drop wages have yet to increase very much, especially since the Great Recession of 2008.  Why?  Venerable neo-liberal economists, such as the New York Times’ Paul Krugman, hypothesize that employers are reluctant to raise wages for fear they cannot cut them in the future.(insert hyperlink here)  Others contend that we have not fully recovered from the recession or that the actual labor force participation rates are still high, making wage increases sticky.  All of these explanations miss the point.  Employers are not raising wages because they do not have to.  The reason is that labor unions are so week now that they cannot do what they historically have done which is to pressure employers to increase wages.

Last week was May 1–May Day.  Yet people forget why we have unions. The last 150 years of American history is the battle of workers and unions against corporations. America in the late nineteenth and early twentieth century was the country of  trusts.  It was the emergence of the railroads,…

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