The Single Best Article on the End of the Social Contract in the U.S.

In the recent issue of the American Prospect editor-at-large Harold Meyerson has written what may be the single best piece on the reasons behind the decline and fall of the American worker since the 1960s and the rise of the age of anxiety.

The disparity between then and now is stark.

In the 25 years before 1974, U.S. productivity increased by 97 percent and median wages rose by an almost equivalent 95 percent. In the 1950s GM and later other companies contractually agreed to guarantee their workers a cost of living increase plus additional raises based on increases in national productivity.

Labor’s share of the national income was 50 percent. The three largest employers in 1960 were high wage, unionized companies: AT&T, GM and Ford.

Almost one third of the labor force was unionized. It was a period of robust give and take between labor and capital. In the 1950s the number of annual major strikes, on average, was 300. Labor won concessions but also seemed to have changed many a CEO’s mindset. In the early 1980s the Conference Board surveyed CEOs and found 56 percent agreed that “employees who are loyal to the company and further its business goals deserve an assurance of continued employment.”

That was then. This is now.

In the 37 years since 1974, productivity grew by 80 percent while median wage compensation l0 percent. Since 2000 productivity has grown 23% while real wages have stagnated.

Today the three largest employers are low wage, retail companies: Wal Mart, YUM!, and McDonalds.

Today only 6.6 percent of the private sector is unionized. The number of annual major strikes has plunged to below 20. Genuine collective bargaining has virtually ceased. The share of national income going to labor has dropped to 43 percent, a shift of about $1.2 trillion from labor to capital. In the late 1990s, the Conference Board found that only 6 percent of CEOs agreed that loyal, productive employees deserved any reciprocal loyalty from their companies.

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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.