{ "title": "Rebuilding Worker Power", "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel", "canonical": "https://www.imf.org/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel", "overlayPath": "/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel/index.md", "summary": "Systematic erosion of workers’ power relative to their employers has suppressed US wages, writes Lawrence Mishel of the Economic Policy Institute.", "sections": [ { "heading": "Summary", "content": "- Systematic erosion of workers’ power relative to employers has suppressed US wages.\n- Wage suppression has increased wage inequality and exacerbated racial disparities.\n- Restoring broad-based growth requires policies focused on rebuilding worker bargaining power." }, { "heading": "Major mechanisms explaining wage suppression", "content": "- Contractionary policy\n - Monetary, fiscal, and trade policies have led to excessive unemployment, defined as unemployment above full employment.\n - Since 1979, Federal Reserve Board policymakers have worried too much about inflation risks and have not embraced the benefits of full employment.\n - Excessive unemployment has hurt low- and moderate-wage workers the most, with concentrated impacts among Black workers.\n - If full employment of 5 percent had been maintained between 1979 and 2007, median wages would have been between 18 and 28 percent higher by 2007 (Bivens and Zipperer 2018).\n - The extended high unemployment following the Great Recession, caused by austere federal and state fiscal policy, compounded wage problems.\n - Excessive unemployment alone explains the 9 percentage point increase in the wage gap between Black and White workers since 1979.\n\n- Globalization on capital’s terms\n - Globalization proceeded in ways that maximized wage-suppressing effects, disproportionately harming Black and Latinx workers.\n - Trade flows with low-wage nations were likely reducing wages for workers without a four-year college degree by roughly 5.6 percent—almost a $2,000 annualized loss (Bivens 2013).\n - Policy failures amplified globalization’s damage: lack of compensation for losers, failure to address currency misalignments, and trade agreements that undercut workers’ leverage while protecting corporate profits.\n - Employers substituted imports for US production, reducing domestic employment and wages.\n\n- Weakened unions\n - Collective bargaining is the key wage-setting institution for middle-wage workers; erosion of union representation is a major factor depressing middle wages, especially for men.\n - Fortin, Lemieux, and Lloyd (2019) show union erosion explains from 29 percent to 37 percent of male wage inequality growth and 37 percent of the growing gap between high-wage and middle-wage men.\n - Eroded unions lowered the male median wage by 0.33 percentage point each year.\n - For women, union decline explains roughly 10 to 13 percent of overall wage inequality growth and 13 percent of the growth of the top-half wage gap.\n - Private sector union coverage fell from about 23 percent in 1979 to just 7 percent in 2019.\n - In 2017, almost half of nonunion workers wanted collective bargaining—an underrepresentation equivalent to approximately 58 million workers.\n\n- Weakened labor standards and enforcement\n - The federal minimum wage in 2019 was 25 percent below its peak value in 1968, even though productivity doubled.\n - Erosion of the minimum wage explains most of the shift in the wage gap between low- and middle-wage workers.\n - Overtime protections have weakened: nearly half of salaried workers in 1975 were covered by the overtime threshold, falling to just 10 percent of salaried workers by 2014.\n - Low-wage workers lost more than $50 billion to wage theft in 2016.\n - Wage theft represents about 3 percent of the total wages of the bottom 60 percent of earners.\n - Experts believe wage theft has become epidemic; it is reasonable to say an additional 1.5 to 2 percent of wages are now lost as a result of wage theft compared with 1979.\n - Roughly 6 percent of the workforce, including undocumented and guest workers, lacks full labor protections.\n - Noncompete agreements now dim the prospects of between 28 percent and 46 percent of private sector workers.\n - Forced arbitration provisions covered 56 percent of nonunion private sector workers in 2018.\n - Millions of workers are being misclassified as independent contractors across sectors including ride-sharing, trucking, construction, and janitorial services, denying them social insurance and workplace protections.\n\n- Corporate structure changes\n - “Fissuring” (domestic outsourcing with dominant firms maintaining control via standards) redistributes profits to dominant firms and worsens wages/conditions at subcontracted firms.\n - Between a fifth and a third of the economy is characterized by fissuring, a much larger share than four decades ago when it was likely half that.\n - A speculative gauge: a shift of 15 percentage points of employment into fissured workplaces where workers earn 15 percent less would imply a 2.25 percent overall decline in wages.\n - Dominant buyers’ ability to squeeze supplier profits increased: the share of nonfinance suppliers’ revenue obtained from dominant buyers rose from 5 percent in 1979 to 19 percent in 2014 overall, including from 6 percent to 26 percent in manufacturing and logistics (Wilmers 2018).\n - Wilmers estimates this lowered annual earnings by 3.4 percentage points among publicly owned nonfinancial firms.\n - Industry deregulation in the late 1970s (airlines, trucking, interstate busing, telecommunications, utilities, and railroads) affected 9 percent of the workforce in the 1980s and eroded middle-wage jobs, explaining the almost 7 percent higher male wage inequality between 1979 and 1988.\n - Both monopoly and employer concentration can lower wages, but employer concentration primarily affects rural areas and does not appear to have grown significantly over four decades.\n - The rise in labor’s share of income as unemployment fell during the recent recovery suggests eroded worker power, rather than monopoly profits, is a key factor in labor’s declining share.\n - The enormous profits of the five big tech firms represent a monopoly problem, though their role in wage suppression is difficult to assess." }, { "heading": "Key statistics and trends", "content": "- Top-earners and productivity\n - Top 1 percent earnings increased 158 percent over the past four decades.\n - Top 0.1 percent earnings increased 341 percent over the past four decades.\n - Economy-wide productivity rose almost 70 percent.\n - Hourly compensation for typical workers increased less than 12 percent.\n - Since 2000, labor’s share of income has steadily eroded.\n\n- Unionization and worker demand\n - Private sector union coverage: about 23 percent in 1979 → 7 percent in 2019.\n - Nonunion worker interest in collective bargaining in 2017: almost half; underrepresentation equivalent to approximately 58 million workers.\n\n- Wage theft and protections\n - Low-wage workers lost more than $50 billion to wage theft in 2016.\n - Wage theft equals about 3 percent of total wages of the bottom 60 percent of earners.\n - Additional 1.5 to 2 percent of wages lost to wage theft compared with 1979 (experts’ assessment).\n - Roughly 6 percent of the workforce lacks full labor protections (including undocumented and guest workers).\n - Noncompete agreements affect between 28 percent and 46 percent of private sector workers.\n - Forced arbitration covered 56 percent of nonunion private sector workers in 2018.\n\n- Fissuring and buyer power\n - Share of economy characterized by fissuring: between a fifth and a third (much higher than four decades ago).\n - Shift scenario: 15 percentage points into fissured workplaces with 15 percent lower earnings → 2.25 percent overall wage decline.\n - Nonfinance suppliers’ revenue share from dominant buyers: 5 percent in 1979 → 19 percent in 2014 overall; manufacturing and logistics: 6 percent → 26 percent.\n - Wilmers estimates a 3.4 percentage point reduction in annual earnings among publicly owned nonfinancial firms due to buyer power." }, { "heading": "Policy recommendations (road ahead)", "content": "- Center future policy on restoring bargaining power to the typical worker.\n- Keep unemployment low (achieve and maintain full employment).\n- Provide adequate labor standards, including family leave and sick leave.\n- Effectively enforce labor laws to prevent wage theft and exploitation.\n- Eliminate forced arbitration and noncompete agreements to enable worker options and access to courts and collective actions.\n- Rebuild collective bargaining and labor representation.\n- These policies aim to reestablish economic fairness, invigorate civic engagement and democracy, and promote freedom in and outside the workplace." }, { "heading": "Conclusion", "content": "- The narrative that wage stagnation was an inevitable by-product of globalization and automation is insufficient; policy choices and corporate practices played central roles.\n- The disproportionate income growth for executives and the top 1 percent cannot be fully explained by automation or special skills.\n- Political and policy action will determine whether workers receive a fairer share of economic growth.\n\nSource: Rebuilding Worker Power — F&D Magazine, LAWRENCE MISHEL, December 2020\n\n---\n\n Content in this bundle\n\n- إعادة بناء القوة العمالية\n - إعادة بناء القوة العمالية (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - إعادة بناء القوة العمالية (PDF){rel=\"external\" type=\"application/pdf\"}\n- Reconstruir el poder de los trabajadores ● Finanzas y Desarrollo ● Diciembre de 2020\n - Reconstruir el poder de los trabajadores ● Finanzas y Desarrollo ● Diciembre de 2020 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Reconstruir el poder de los trabajadores ● Finanzas y Desarrollo ● Diciembre de 2020 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Restaurer le pouvoir des travailleurs\n - Restaurer le pouvoir des travailleurs (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Restaurer le pouvoir des travailleurs (PDF){rel=\"external\" type=\"application/pdf\"}\n- Rebuilding Worker Power – IMF F&D\n - Rebuilding Worker Power – IMF F&D (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Rebuilding Worker Power – IMF F&D (PDF){rel=\"external\" type=\"application/pdf\"}\n- Восстановление позиций работников – Финансы и развитие – декабрь 2020 года\n - Восстановление позиций работников – Финансы и развитие – декабрь 2020 года (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Восстановление позиций работников – Финансы и развитие – декабрь 2020 года (PDF){rel=\"external\" type=\"application/pdf\"}\n- 重建工人权力 - 金融与发展 - 国际货币基金组织季刊\n - 重建工人权力 - 金融与发展 - 国际货币基金组织季刊 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 重建工人权力 - 金融与发展 - 国际货币基金组织季刊 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel" } ], "bullets": [ "[Markdown version](/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel/index.md)", "[Structured JSON version](/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel/index.json)", "[Bundle manifest](/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel/bundle-manifest.json)", "Authors: LAWRENCE MISHEL", "Published: December 1, 2020", "Systematic erosion of workers’ power relative to employers has suppressed US wages.", "Wage suppression has increased wage inequality and exacerbated racial disparities.", "Restoring broad-based growth requires policies focused on rebuilding worker bargaining power.", "Contractionary policy", "Globalization on capital’s terms", "Weakened unions", "Weakened labor standards and enforcement", "Corporate structure changes", "Top-earners and productivity", "Unionization and worker demand", "Wage theft and protections", "Fissuring and buyer power", "Center future policy on restoring bargaining power to the typical worker.", "Keep unemployment low (achieve and maintain full employment).", "Provide adequate labor standards, including family leave and sick leave.", "Effectively enforce labor laws to prevent wage theft and exploitation.", "Eliminate forced arbitration and noncompete agreements to enable worker options and access to courts and collective actions.", "Rebuild collective bargaining and labor representation.", "These policies aim to reestablish economic fairness, invigorate civic engagement and democracy, and promote freedom in and outside the workplace.", "The narrative that wage stagnation was an inevitable by-product of globalization and automation is insufficient; policy choices and corporate practices played central roles.", "The disproportionate income growth for executives and the top 1 percent cannot be fully explained by automation or special skills.", "Political and policy action will determine whether workers receive a fairer share of economic growth.", "**إعادة بناء القوة العمالية**", "**Reconstruir el poder de los trabajadores ● Finanzas y Desarrollo ● Diciembre de 2020**", "**Restaurer le pouvoir des travailleurs**", "**Rebuilding Worker Power – IMF F&D**", "**Восстановление позиций работников – Финансы и развитие – декабрь 2020 года**", "**重建工人权力 - 金融与发展 - 国际货币基金组织季刊**" ], "related": [ { "title": "إعادة بناء القوة العمالية", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/december/ar/mishel.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/december/ar/mishel.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/december/ar/mishel.pdf", "mime": "application/pdf" } }, { "title": "Reconstruir el poder de los trabajadores ● Finanzas y Desarrollo ● Diciembre de 2020", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/december/es/rebuilding-worker-power-mishel.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/december/es/rebuilding-worker-power-mishel.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/december/es/rebuilding-worker-power-mishel.pdf", "mime": "application/pdf" } }, { "title": "Restaurer le pouvoir des travailleurs", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/december/fr/rebuilding-worker-power-mishel.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/december/fr/rebuilding-worker-power-mishel.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/december/fr/rebuilding-worker-power-mishel.pdf", "mime": "application/pdf" } }, { "title": "Rebuilding Worker Power – IMF F&D", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/december/rebuilding-worker-power-mishel.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/december/rebuilding-worker-power-mishel.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/december/rebuilding-worker-power-mishel.pdf", "mime": "application/pdf" } }, { "title": "Восстановление позиций работников – Финансы и развитие – декабрь 2020 года", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/december/ru/mishel.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/december/ru/mishel.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/december/ru/mishel.pdf", "mime": "application/pdf" } }, { "title": "重建工人权力 - 金融与发展 - 国际货币基金组织季刊", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/december/zh/mishel.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/december/zh/mishel.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/december/zh/mishel.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel/index.md", "json": "/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel/index.json", "bundleManifest": "/en/publications/fandd/issues/2020/12/rebuilding-worker-power-mishel/bundle-manifest.json" }, "generatedAtUtc": "2026-09-15T06:40:35.219Z" }