Commentary | Wages, Incomes, and Wealth

Much work to do to ensure future Labor Days brighter: Post-WW II gains for all workers must be reclaimed

Opinion pieces and speeches by EPI staff and associates.


Much work to do to ensure future Labor Days brighter

Post-WW II gains for all workers must be reclaimed

by Ross Eisenbrey

Americans used to take pride in our shared prosperity and strong middle class. For the first 30 years after World War II, the United States benefited from a balanced economy that brought about a tremendous increase in national wealth and living standards. We invested in our infrastructure (creating a system of interstate highways), in higher education (the GI Bill more than doubled the number of students at many state universities), in health care (Medicare was enacted in 1966), and in research and development (the Apollo Project ushered in the space age).

The result was a doubling of national wealth, the highest wages in the world, tremendous advances in longevity, and huge declines in poverty.

Strong unions represented one-third of the work force and had political clout, ensuring that growing corporate income was fairly shared with workers, including those without representation. Every income group benefited, but incomes grew fastest for the lowest-income Americans.

As a result, most middle-class Americans — including blue-collar workers — had good health care, looked forward to secure retirements, and could send their kids to college if desired.

Today, all of that has changed. After hostile management took on what it called “Big Labor” in the 1970s and ’80s, union representation declined precipitously, leaving management free to suppress wages and slash benefits even when productivity soared. Meanwhile, the minimum wage stagnated, its real value falling by a third. And deregulation of the airline, trucking, electricity, telecommunications and other industries destroyed good jobs, while imported manufactured goods flooded into the United States as never before.

The results have been the opposite of the strong and balanced growth of the first 30 post-war years.

Market fundamentalism, de-unionization, deregulation and corporate-dominated globalization have failed to lift all boats. Economic growth slowed significantly after 1975, and the fruits of that growth have gone overwhelmingly to the richest few.

While middle-class incomes barely rose over the last 30 years (and those gains that did occur were mostly due to women increasing their hours of paid work), households in the top income quintile gained 84 percent and those in the top 1 percent gained 450 percent.

CEO pay among the Fortune 500 is now more than 400 times average pay. CEOs have taken good care of themselves and wealthy investors but have generally held down wages and cut benefits for most of their employees.

Corporate greed has been mirrored by a politics of greed, another result of declining union power. Tax cuts for the rich, especially in the current administration, exacerbated the transfer of wealth from the many to the few. From 2000 to 2005, 3.6 percent of national income was transferred from the bottom 90 percent to the top 1 percent — approximately $270 billion. Taxing the compensation of millionaire hedge fund managers at a lower rate than their secretaries is just one egregious example of how this income transfer has happened.

To return to broadly shared prosperity and strong economic growth, enormous changes in economic policy will be necessary. The Bush tax cuts must be reversed or restructured to favor average Americans. Employees must regain the right to join unions and to bargain collectively, a right eroded by weak laws and a hostile administration. Legislation in Congress — the Employee Free Choice Act — can help begin that process by granting bargaining rights once a majority of employees have signed authorization cards.

Globalization and trade policy must be better managed to ensure that its benefits reach workers here and abroad, rather than just investors and CEOs. The new Peru Free Trade Agreement is a step in that direction because it calls for Peru to improve labor rights before obtaining increased access to U.S. markets.

Public investment in new energy sources and a modern transportation infrastructure is essential. And broad access to affordable health care, higher education and secure retirement must be assured.

Yes, this will cost money. But the richest nation on Earth can afford to provide these necessities if everyone pays his fair share.

If we take these steps, just as the Greatest Generation provided for shared prosperity in its time, then there will be reason to celebrate on future Labor Days.

Eisenbrey is vice president and policy director of the Economic Policy Institute (


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