Wages still stagnate in new jobs report, and conservative policies are to blame

Updated
Diana Huffman holds a sign in support of striking Walmart workers protesting unsafe working conditions and poor wages outside a Walmart store in Pico Rivera, California, October 4, 2012.
Diana Huffman holds a sign in support of striking Walmart workers protesting unsafe working conditions and poor wages outside a Walmart store in Pico Rivera, California, October 4, 2012.
Jonathan Alcorn / Reuters

Commentary

Though some conservatives have challenged the credibility of Friday’s jobs report, the official Republican Party line seems to be that the numbers are accurate. But while Republican leaders such as Reince Priebus and John Boehner admit that unemployment dropped in September, they argue that the jobs being created aren’t good enough.

“While there is positive news in today’s report, job creation is far too slow and the unemployment rate is far too high,” said Speaker Boehner in a statement, adding that “millions of Americans remain jobless, underemployed, or have simply given up looking for work. Wages are stagnant.”

RNC Chair Priebus echoed Boehner’s line in his own statement on the jobs report, saying, “Too many Americans are still struggling for work in today’s economy, and for too many families, the last four years has seen declining wages and increasing costs.”

Members of the conservative media and think tank infrastructure agree. James Pethokoukis of the American Enterprise Institute writes that the jobs report was “terrible,” in part because, “When you take inflation into account, wages are flat to down.” And the editorial board of the Washington Examiner writes that the increase in low-wage, low-skill work proves, “America isn’t doing well at all under Obama’s leadership.”

Conservatives are half-right: Even as America has recovered some of its lost jobs, wages continue to stagnate or even shrink, despite a very modest bump in September’s preliminary job numbers. What the above right-wing figures fail to mention, however, is that wage stagnation has persisted in the United States for decades. As the Economic Policy Institute points out in the latest edition of The State of Working America, “Productivity grew 80.4 percent between 1973 and 2011, when, as noted, median worker pay grew just 10.7 percent.” However you feel about President Obama’s economic policies, they are unlikely to have done very much damage to the wages of workers in the 70s. Instead, wages have suffered in thanks in large part to policies which the Republican Party still vigorously supports: namely, keeping the minimum wage low and suppressing the power of unions.

Currently, the federal minimum wage is set at the absurdly low rate of $7.25 per hour. An employee working 40 hours a week on minimum wage without taking any time off would earn $15,080 per year—before taxes, that is. That’s slightly below the federal poverty line for a household of two. Nor was it always like that; if the minimum wage had kept up with inflation since it was first passed in the late 60s, reports the National Employment Law Project [PDF], it would be $10.55.

Research suggests that raising the minimum wage could ameliorate stagnation even for workers making over $7.25 an hour. A study [PDF] of three cities by the Center for Economic Policy Research found evidence to “support the view that a citywide minimum wages can raise the earnings of low-wage workers, without a discernible impact on their employment.” Similarly, in a recent letter to Congress, top economists including Nobel Prize winner Joseph Stiglitz and former Labor secretary Robert Reich argued that “nearly 9 million workers whose wages are just above the new minimum would likely see a wage increase through ‘spillover’ effects, as employers adjust their internal wage ladders.”

Though Democrats perennially suggest raising the minimum wage—most recently to $10 an hour—congressional Republicans almost uniformly oppose any increase, claiming that it would kill jobs and hurt small businesses. As the dollar inflates, their stonewalling means the real value of the minimum wage is certain to drop even further. Mere stonewalling, however, is nothing compared to the Republican Party’s ongoing attack on unions.

As the Economic Policy Institute’s Lawrence Mishel writes, “the ongoing erosion of unionization” has played a key role in driving down American wages. (Between 1973 and 2011, union density more than halved, going from 26.7 percent to 13.1.) Other studies have corroborated EPI’s findings. According to the New York Times, a 2011 report published in the American Sociological Review found that “the decline of organized labor held down wages in union and nonunion workplaces alike.” Managers of nonunion work places, the argument goes, had to raise wages in periods of high union density to avert the threat of organizing campaigns in their own companies.

The list goes on. Mother Jones’ Kevin Drum makes much the same point in a 2011 essay about the decline of the labor movement, citing the respected historian Kim Phillips-Fein. In the influential 1984 book What Do Unions Do? Harvard economists James Medoff and Richard Freeman even went so far as to write, “Everyone ‘knows’ that unions raise wages. The questions are how much, under what conditions, and with what effects on the overall performance of the economy?”

There are many factors that contributed to the half-century decline of the labor movement, but suffice to say that Barack Obama’s policies are not among the most important ones. Indeed, though the Democrats are surely far from blameless, it is the Republican Party which has most aggressively suppressed union power in recent decades. America’s 23 “right-to-work” states—states where unions are forbidden from requiring all members of a union shop to pay dues—are overwhelmingly Republican. The 2012 GOP Platform goes so far as to call for a national right-to-work law. Furthermore, it is Republican governors like Wisconsin’s Scott Walker and Ohio’s John Kasich who have led the charge in try to roll back public employee collective bargaining rights.

The GOP’s modern anti-union stance has its roots as far back as the beginning of the Reagan administration. President Reagan’s 1981 battle with the air traffic controllers union (Patco) is widely regarded as a turning point in American labor relations. When Reagan successfully ended a Patco strike by threatening to fire 13,000 employees, writes historian Joseph A. McCartin, he “undermined the bargaining power of American workers and their labor unions” by chilling their willingness to strike. That, according to economist Mark Thoma, was “the beginning of the end for unions in the US.”

With all that in mind, it’s more than a little odd to hear the Republican Party bemoan the state of American workers’ wages. The party has done more than any single other institution in the United States to engineer that wage stagnation through their crackdown on organized labor. Though President Obama has a tense relationship with the labor movement at best, he did not create the conditions which led to their decline and the commensurate drop in wages. If Republicans want a party to blame, they had best look in the mirror.

Reince Priebus and John Boehner

Wages still stagnate in new jobs report, and conservative policies are to blame

Updated