Union power and the jobless recovery
MEGAN MCARDLEaddresses the oft-repeated contention that a dearth of union power somehow accounts for the fact that growth has picked up steam without much reducing unemployment. "[T]he decline of the labor movement is not an uncaused cause," Ms McArdle is right to note, and she goes on to mention the entry of women into the workforce and the increasingly "rapid pace of structural change in the economy" as two widely-noted potential sources of union decline. However:
The most plausible third factor, to my mind, is one that not many bloggers did mention: companies are simply more competitive than they used to be. The mighty labor-industrial complexes of the postwar era were mostly cosy oligopolies; there was a lot of value for labor to extract because they didn't have to worry so much about losing their customers. Those cosy oligopolies had cosy relationships with bankers, who lent them money to keep overstaffed in downturns without much thought of how the depositors would feel, and the depositors didn't care because their heavily regulated accounts paid exactly the same interest rates as every other bank, and were federally insured. The CEOs, cosily safe from interference by meddling outsiders like shareholders, could amass vast piles of cash to keep workers on even when there was little work for them, as well as building their conglomerated empires.
I think there is much to be said for this hypothesis. Brink Lindsey's paper on the "nostalgianomics" of those who pine for the mid-century"Treaty-of-Detroit"era paints an unblinkered portrait of how that system actually fit together. The wreck of the world's other advanced economies, America's anti-competitive industrial policy, and sexist, racist, xenophobic laws and social norms did combine to produce a fleeting golden a! ge of ro bustly rising middle-class wages and rock-solid job security for working white American men with the good fortune to land a union gig. But this just couldn't last, and probably we should be glad it didn't.
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