Declining status of the Working Class
David Autor a distinguished MIT labor economist and colleagues in the book “The Work of the Future- Building better jobs in an age of intelligent machines”, do a great job in summarizing a very complex devolution in the US economy and society that has been poorly understood and explained to the general public. While the US economy has enjoyed continued success amongst industrialized nations in the past few decades, the real wage growth of average Americans and the economic wellbeing of middle-class Americans has been left behind despite the country’s economic progress. In order to address the declining status of the American working class, the aspects of our society prioritizing greed, excess, and avarice over the common good that have driven our economic success as a country need to be realigned and need to be tied to the day-to-day economic reality of working-class Americans.
“Over the last four decades, wage growth for the majority of US workers has diverged from overall productivity growth…No single cause accounts for these multiple maladies, but three factors appear most important. First, the advancing digitalization of work has made highly educated workers more productive and less-educated workers easier to replace with machinery. Second, the acceleration of trade and globalization, spurred by surging US imports from China and the rapid outsourcing of US productivity work, caused a rapid decline of manufacturing employment. Finally, institutions that once enabled rank-and-file workers to bargain for wage growth to match productivity growth have eroded. This erosion is seen in plummeting labor union membership and falling real federal minimum wage levels, which are now approaching historic lows…
These unfavorable outcomes were not an inevitable consequence of technology, globalization or market forces. No other wealthy industrialized country has seen an equally larger rise in inequality or equally severe wage stagnation among rank-and-file workers as has the United States…
Boosted by rising education and skill levels, advancing workplace technologies, growing global integration, and numerous accompanying factors, labor productivity in the US has risen steeply. And yet these productivity gains have not translated into broadly based increases in incomes because the supporting societal institutions and labor market policies that perform that function have fallen into disrepair. The US must reinvigorate and modernize those institutions and policies to restore the synergy between rising productivity and improvements in work…
►The US also needs to reevaluate the devotion to pure stakeholder capitalism—which has arguably helped fuel the drive to curtail wages and benefits for low-wage workers. While shareholder capitalism can plausibly be credited with some of the productive dynamism of the US economy, it needs to be balanced with greater emphasis on creating a system that bolsters the skills and compensation of all workers.”
The Work of the Future- Building better jobs in an age of intelligent machines- David Autor, David Mindell, Elisabeth Reynolds