Category: Samuelson, Robert


In honor of Labor Day, we comment on what is happening in the U.S. labor market. It is a frightening place.

Robert Samuelson says in the Washington Post (“In today’s world, workers are scared,” September 2.) that

.. American workers face a buyers’ market. Employers have the upper hand .. What looms, at best, is a sluggish descent from high unemployment (7.4 percent in July) and a prolonged period of stagnant or slow-growing wages. Since 2007, there has been no gain in average inflation-adjusted wages and total compensation ..  The weak job market has a semi-permanence unlike anything seen since World War II.

Samuelson offers a historical synopsis. He references three labor regimes since 1900. The first regime was nearly devoid of regulation:

[It] featured “unfettered labor markets,” as economic historian Price Fishback of the University of Arizona puts it. Competition set wages and working conditions. There was no federal unemployment insurance or union protection.

The second came after World War II and, as a Hegelian anti-thesis of the first regime, saw increased regulation:

[L]abor relations became more regulated and administered .. The Wagner Act of 1935 gave workers the right to organize; decisions of the National War Labor Board also favored unions. By 1945, unions represented about a third of private workers, up from 10 percent in 1929.

Finally, the current regime is a confusing mix of old and new:

The private safety net is shredding, though the public safety net (unemployment insurance, Social Security, anti-poverty programs, anti-discrimination laws) remains. Economist Fishback suggests we may be drifting back toward “unfettered labor markets” with greater personal instability, insecurity — and responsibility. Workers are often referred to as “free agents.”

Karen McVeigh in the Guardian (“Fast food workers continue fight against low wages,” The Guardian, August 29) discusses the movement to increase the minimum wage, and notes how the U.S. lags behind the U.K.

..where the minimum wage is £6.11 ($9.50), Australia, where it is 15.96 Australian dollars, ($16.91), France, €9.43($12.68), and Tokyo,$9.10. And while the U.S.’s nearest neighbour, Canada, doesn’t have a minimum wage, the lowest provincial wage in Alberta is $9.73 in US dollars.

According to those striking in a nationwide protest, this is a question of social justice. Pastor WJ Rideout the III of Detroit is part of a campaign for a minimum wage of $15. He says that

People can’t survive off $7.25 an hour .. A gallon of milk is almost $5 today .. Every thing has gone up significantly but the minimum wage has not. People are crazy to think you can live on minimum wages. Fast-food jobs are no longer starter jobs, they are mom-and-pop jobs, even senior citizens jobs. We call them survivor jobs now, because all people are doing is surviving.

For a statistical profile of the working poor, we refer our readers to an April 2013 US Bureau of Labor report.

In sharp contrast to McVeigh, the August 30 editorial of Investor’s Business Daily (“Doubling fast-food workers’ wages will kill jobs,” ) focuses on econo­mic effici­ency, not justice.  

With last week’s one-day strike, fast-food workers sent a clear message .. But they should be careful what they wish for; they just might get it. ..  It isn’t hard to see what a doubling of the minimum wage would do in an industry that pays out an estimated 70% of revenue to workers: Hundreds of thousands would lose their jobs overnight.

So who will do their jobs, you ask. A more apt question is what will do their jobs. Because they may go to robots. Or computers. Don’t laugh. When labor costs rise, technological substitutions suddenly make economic sense.

It’s already happening in Europe, where it costs a lot to hire a worker, McDonald’s has installed 7,000 new ATM-style machines that take orders and payments. No muss, no fuss, no arguments, no misunderstandings — and no minimum wage ..