The agreement was broken....

[kentuck]

.

After the union movement of the 40's and 50's, there was an understanding between labor and business that they would share in the productivity. As profits rose, so would wages.

But that understanding disappeared sometime around the late 70's. Inflation forced labor not to ask for any wage increases, for fear of driving up prices even more. Jimmy Carter appealed to unions not to ask for wage increases at the time.

When the 80's rolled around, with the high inflation, high interest rates, and the busting of PATCO, wages began to stagnate and have been that way ever since. Even in the 90's, when there was the closest thing we have seen to full employment in our lifetimes, wages did not really go up very much at all.

The capitalists saw no need to share in the productivity anymore. They simply gave it to their CEOs, as if they were the ones that created it. The average CEO pay went from 40 times the average worker to 400 times the average worker. You don't need a weatherman to know which way the wind blows...


.

[MadMaddie]

1. Reagan and the right wing revolution happened....

you can pretty much see the decline from that time forward to the present

[sandnsea]

2. 10 million jobs created under Carter

Was it just because there were too many boomers going into the job market? I never have seen a good explanation of what happened to jobs and the economy in the 70s.

[kentuck]

3. There were jobs under Carter.

.

After Watergate and the first oil crisis, when gas prices doubled, Gerald Ford governed during a very tough recession. Jimmy Carter inherited both of those problems. But with the oil prices and gasoline prices going up, they drove up the prices of everything in our marketplace, down to a loaf of bread. That is what created the inflation. Ronald Reagan ran for office in 1980, mostly blaming Carter for the inflation and high interest rates, even though it was primarily the result of the Nixon and Ford Administrations. Reagan became a cult of personality and still has his worshipers even today. The entire Republican Party bought into his "supply-side" arguments. They actually believed that we could cut taxes by trillions and that tax receipts would increase to the Treasury. Well, maybe they didn't believe it? But most of Reagan's followers believed it. George HW Bush Sr and Bill Clinton were like caretakers until a real "conservative" could get back into power. Then they voted for George W Bush. They got the gold mine and we got the shaft.


.
edit for the correct Bush ..

[sandnsea]

4. I got my first job in 1974

I don't think manufacturing collapsed solely because of oil prices. I could be wrong, but I always had the idea that it was more complex than that.

[kentuck]

5. There were still many manufacturing jobs in America in the '70's..

The "global economy" had not yet been accomplished. There were no NAFTA or GATT or those types of trade treaties that permitted our jobs to leave this country.

Oil prices caused the inflation after the first oil crisis under Ford. Remember the long lines to get gas? Carter was dealt that hand. But you are right, that was not what caused the collapse of manufacturing.

[sandnsea]

6. Wow, different memories

Keds shoes were being made overseas in 1979. My office job was downsized because they didn't need as many offices around the country to process shoe orders, since they were all coming in from overseas anyway. And I didn't even get trade adjustment assistance because we worked through a subsidiary company, not Keds itself. I got a taste of the "global economy" in 1980. Outsourcing didn't start with NAFTA.

I also know remember the Chrysler bail-out, auto job losses, steel plants closing, etc etc. I don't think it was just due to oil.

[kentuck]

7. Different memories indeed.

But I don't believe anyone said that "everything" was "due to oil". It was a big cause of the inflation, which was seen as the major economic problem of the late 1970's. Capitalism is always looking for new markets with cheaper and cheaper labor. No doubt they were doing that in the 70's also.

Strange how we see things so differently depending on where we were at the time. Where we stand has a lot to do with where we are sitting.

[xchrom]

8. recommend

[Statistical]

9. A pair of charts to put an emphasis on your point.

The idea that the United States isn't massively prosperous (despite global trade) is a misnomer. GDP has risen steadily by 20%-60% per decade. However starting int the 1970s and accelerating in the 1980s the share of that prosperity increase going to wages steadily shrunk until wages essentially flat lined. Even as productivity hit all time records in both growth and nominal terms in the 1990s none of it went to improved wages.

This was hidden for a long time via spouse joining work force, then low interest rates (cars & homes), then people maintaining lifestyles by debt (credit cards -> re mortgage -> HELOC). All that was unsustainable. Unless we plan on changing marriage to be between 3 people, or making interest rates negative, or giving everyone a $100,000 AMEX wages have to rise.

It isn't rocket science.

[kentuck]

11. Thanks for making my point better than I.

There it is. Coupled with the huge taxcuts, we can see who got it all.

[blindpig]

10. That 'agreement' was always provisional....

the Capitalists were coerced into making concessions and never liked it. It was inevitable that they would roll everything back, due diligence, ya know? Capital cannot do anything but seek to increase profits, lower cost, and labor is the major cost, stealing it from the workers is the basis of Capitalism. We should not expect otherwise, there is no coexistence with Capital, it is them or us.

[snot]

12. Also during the late 70's, we had high unemployment

A lot of people were having trouble finding or holding onto jobs -- also makes it tough to demand raises.

[Brickbat]

13. Companies and municipalities also asked workers to take pension increases or health care bonusus

instead of wage increases. BEGGED them to. Those chickens are roosting quite comfortably now as well.