The Wage Crunch in Perspective

The Wage Crunch in Perspective

Thomas Piketty’s Capital in the Twenty-First Century merits ongoing praise for the renewed attention it has drawn to the challenge of American inequality. The decade of collaborative and comparative work on the trajectory of top incomes that it represents, as well as the new measures of wealth inequality it details, are invaluable. (The findings for the United States are summarized here.)

Needless to say, the book has incurred its share of criticism—some substantive, some silly. But of all the theoretical and methodological issues with Piketty’s sweeping account that reviewers have raised, I think the singular lingering weakness is this: the political and institutional sources of American inequality (and of American exceptionalism) are given short shrift. Piketty devotes surprisingly little attention to the policy shifts that unshackled incomes at the top and destroyed bargaining power at the bottom. “It’s like saying slavery is an inequality of assets between slaves and slaveholders,” as Suresh Naidu put it in Jacobin, “without describing the plantation.”

The starting point for such a description is not wealth or income, but wages—the trajectory of earnings for ordinary Americans. The Economic Policy Institute’s Raising America’s Pay project draws together the best recent work on this, highlighting the yawning gap between productivity and compensation, the last decade of flat wage growth, and the crushing weight of persistent unemployment and underemployment.

The graphic below takes a longer view, tracing real (inflation-adjusted) wages in key productive sectors since the 1930s and 1940s. The sectors covered here, like meatpacking or automobiles, are those for which decent wage data can be assembled for this full sweep of over seventy years. Importantly, they are also those sectors that we have historically relied upon for living-wage employment. Into the 1970s, as the uniform growth in real wages suggests, jobs in these industries were a ticket to the middle class. Since the late 1970s, however, wages in these industries have flattened at best—and in some cases fallen off substantially.

Colin Gordon is a professor of history at the University of Iowa. He writes widely on the history of American public policy and is the author, most recently, of Growing Apart: A Political History of American Inequality.

Read Colin Gordon’s recent nine-part series on the history of U.S. inequality here.