I just finished reading Harold Meyerson's outstanding article in The American Prospect titled "The 40-Year Slump". Myerson explores how the The American Dream has been eroded over the past forty years, and strongly suggests that the major factor in the decline has been the weakening of unions.
"Since 1947, Americans at all points on the economic spectrum had become a little better off with each passing year... Productivity had risen by 97 percent in the preceding quarter-century, and median wages had risen by 95 percent... But no one could deny that Americans in 1974 lived lives of greater comfort and security than they had a quarter-century earlier. During that time, median family income more than doubled.
Then, it all stopped. In 1974, wages fell by 2.1 percent and median household income shrunk by $1,500. To be sure, it was a year of mild recession, but the nation had experienced five previous downturns during its 25-year run of prosperity without seeing wages come down... What no one grasped at the time was that this wasn’t a one-year anomaly, that 1974 would mark a fundamental breakpoint in American economic history."
A couple more quotes below the fold, but really, it's absolutely worth reading the whole article.
The Walmartization details are interesting. Myerson suggests that the Arkansas company's spread nationwide spread brought with it Southern disregard for unions and forced wages down throughout the country, and not just in retail.
"The definitive Southern company, and the company that has done the most to subject the American job to the substandard standards of the South, has been Wal-Mart, which began as a single store in Rogers, Arkansas, in 1962. That year, the federal minimum wage, set at $1.15 an hour, was extended to retail workers, much to the dismay of Sam Walton, who was paying the employees at his fast-growing chain half that amount. Since the law initially applied to businesses with 50 or more employees, Walton argued that each of his stores was a separate entity, a claim that the Department of Labor rejected, fining Walton for his evasion of federal law."
"When a Wal-Mart opens in a new territory, it either drives out the higher-wage competition or compels that competition to lower its pay. David Neumark, an economist at the University of California, Irvine, has shown that eight years after Wal-Mart comes to a county, it drives down wages for all (not just retail) workers until they’re 2.5 percent to 4.8 percent below wages in comparable counties with no Wal-Mart outlets. By controlling a huge share of the U.S. retail market, including an estimated 20 percent of the grocery trade, Wal-Mart has also been able to mandate reduced prices all along its worldwide supply chain. In response, manufacturers have slashed the wages of their employees and gone abroad in search of cheaper labor....But Wal-Mart’s antipathy to unions and affinity for low wages merely reflects the South’s historic opposition to worker autonomy and employee rights. By coming north, though, Wal-Mart has lowered retail-sector wages throughout the U.S. One academic survey found that while just 2.3 percent of manufacturing workers in 1989 were temps, by 2004 the number had risen to 8.7 percent."
Finally, Myerson points out that none of this had to happen, as shown by the example of Germany. But again, read the whole article.