A few thoughts on slower wage growth over the past few decades

Dec 2018
New England
You can't talk about wage issues for long before someone from the left will chime in about the glory days of labor just after WWI. It's rather amusing as it's the 1950's that is so of often their favorite decade to throw at conservatives during "social justice" arguments (as in "... you just want to take us back to the 50's when blacks and women knew their places!"). Here's the deal, slower wage growth over the last few decades probably has far more to do with changing demographics and civil rights advances than it does union membership attrition or tax policy.

Several things were true about the labor market right after WWII that are not true today. Immigration was almost zero. Women were excluded from many industries, and if they had a job were expected to leave it and mind the homestead after marriage. Non-European ethnic minorities were effectively barred from all but low-level jobs. The ability to draw on and manage a global workforce in most industries was simply not there. All this means that employers looking to fill good-paying jobs in the halcyon days of union membership had their choice of domestic, white men.

These factors created an artificially scarce labor pool prior to the 1960s. And as any econ 101 student can tell you, scarcity of a desired resource drives up the price of that resource, and the price of labor is wages. Employers now have a vastly larger supply of labor from immigration, women entering and staying in the workforce, off-shore workers, and from many other types of people who simply would not have been candidates for the higher paying jobs in years past.

Labor is a market like any other, and we'd be wise to remember that.