From 1947 through about 1978, wages and benefits for rank-and-file workers grew roughly in tandem with the overall productivity of the U.S. economy: both more than doubled over that period. Between 1979 and 2007, productivity shot up by another 70 percent. But compensation for the American rank and file hardly moved, inching up only 5 percent, after factoring in inflation. In recent decades, only the elite—those in the top tenth of income distribution—saw their real earnings keep pace with gains in productivity. By the end of the previous economic expansion, in 2000, the median American family earned about $61,000 annually, after accounting for inflation. In 2007, before the economy turned down again, the median family had seen its earnings contract to $60,500. The median inflation-adjusted earnings of men working full-time in 2005 were slightly lower than they had been in 1973. For the first time since the government began keeping records more than a half century earlier, an expansion had ended, with most Americans effectively sliding backward. During the same general period, corporate profits as a percentage of national income swelled close to the highest level in sixty years. Organized labor is relatively weak now, but for more than a century it has been the most important force for positive economic reforms in the United States, from the eight-hour work day, to health insurance and Medicare, social security, pensions and minimum wages.
At the end of the twenties, the American union movement was in retreat. By 1930 only a bit more than 10 percent of nonagricultural workers were unionized, a number roughly comparable to the unionized share of private-sector workers today. But by the end of World War II more than a third of non-farm workers were members of unions—and many others were paid wages that were set either to match union wages or to keep workers happy enough to forestall union organizers. In the 1950s America was a nation in which organized labor played a powerful, visible role. America's unionization rate was higher than that of Canada, Italy, or France. In 1960, Canada and the US had approximately the same percentage of unionized wage and salary workers (at 31%). By 1999, The US's percentage was down to 13.5% while Canada 's was stable at 32.6%.
The sources of union decline in America lie not in market forces but in the political climate created by movement conservatism, which allowed employers to engage in union-busting activities and punish workers for supporting union organizers. Without that changed political climate, much of the service economy—especially giant retailers like Wal-Mart—would probably be unionized today. Business interests, which seemed to have reached an accommodation with the labor movement in the 1960s, went on the offensive against unions beginning in the 1970s. And we're…talking about hardball tactics, often including the illegal firing of workers who tried to organize or supported union activity. During the late seventies and early eighties at least one in every twenty workers who voted for a union was illegally fired; some estimates put the number as high as one in eight. The collapse of the U.S. union movement has no comparison in any other Western nation. Undermining and destroying collective bargaining rights is one of the most important structural reforms that any right-wing government in a developed country can win.
Much if not most of the anti-union activity that led to the sharp decline in American unionization was illegal even under existing law. But employers judged, correctly, that they could get away with it.The sharpest increases in wage inequality in the Western world have taken place in the United States and in Britain, both of which experienced sharp declines in union membership. Imagine how different worker pay would be in the US if Wal-Mart employees were part of a union that could demand higher wages and better benefits. While retail prices might be slightly higher the retail giant wouldn't go out of business—and the American middle income earners would have several hundred thousand additional members.