As Labor Day approaches do we have a resurgence in worker power?
Reuters is reporting today that fast food worker strikes are causing shut downs in fast food establishments in major cities across the United States. Could Labor Day 2013 mark a turning point, a resurgence, an upturn in workers organizing for better pay and working conditions.
It may be that worker strength and bargaining position has finally hit bottom. But it is probably unlikely.
Here are the facts.
The share of the work force that is represented by unions has been on a long steady decline and is at a long time low. Between 1983 and 2012 the share of the total wage and salary workers represented by unions fell from 23.3 to 12.5 percent, according to Bureau of Labor Statistics data.
In circa 1965, students of economics were taught about an economic constant, that the share of total United States income that goes to labor was about two-thirds, or 66.7 percent. The other third of income went to capital and its owners (owners of companies and factories and buildings and machinery and land). For a while the share of income going to labor did look to be pretty constant, hovering around that two-thirds number. Economists even embedded the number in what was called the nation's aggregate production function.
But something happened beginning around the year 2000. The share of income going to labor began to fall. And it hasn't happened only in the United States. Bruce Bartlett has written a nice piece about this in which he presents a graph of the decline in labor share of income, showing the decline not only in the United States but also in other developed nations. His graph clearly shows labor share in the United States holding relatively steady at around the two-thirds level until about the year 2000, and then begin a descent. A Monthly Labor Review report, published by BLS, estimated labor's share of income in the United States had fallen to less than 58 percent by the third calendar quarter of 2010. Part of the fall may be due to the Great Recession of 2007-2008 and the slow recovery, but the decline in labor share started well before that economic downturn.
All this coupled with a current national unemployment rate of 7.3 percent as of July 2013 does not point to a happy Labor Day for workers.