A fairly simple explanation that for some reason I don't see a lot of is the drop in union membership density around this time period. Such a drop would decrease bargaining power and therefore decrease the rate of wage increase
After having witnessed dramatic declines in union membership in new European Union members, and continuing downward trend in Scandinavian countries, I feel like the drop in membership is the consequence of unions becoming powerless, not a cause. If even the large unions cannot mount any effective pressure for increasing compensation, shrug at layoffs, and are fatalistic about outsourcing, what's the point of being a member?
Anecdote from Finland: in a personal conversation, one long-term union representative bemoaned that, until mid 2000s, companies considered unions as partners, consulted difficult staffing decisions with them, or at the very least felt obliged to justify the reasoning behind companies' decisions. After the crisis, the mood all changed - spending cuts, layoffs or any changes to salaries or benefits are now presented as a done deal from higher up, any union negotiations are treated as a mere formality.
The drip is definitely correlation until proven to be causation. So it is possible the drop was a function of a common underlying cause.
The reason no other explanation makes sense to me is that any purely market based explanation, like energy or China, we would see a corresponding drop in US labor force productivity, but the whole point is that that productivity did not drop.
One question i have for you is, why didn’t the union just fight the cuts? A union is not a nicety granted by the corporation, its whole reason to be is to fight corporate power when needed. It sounds to me like that union was already made powerless by the time the crisis occurred.
You can see union membership was on the decline since the 1950s, but it accelerated around the 70s. It is hard to see the timeline in that graph, in this one it is harder to see the acceleration, but it is easier to see the timeline: https://rpubs.com/jncohen/uniondensity
throwaway-8c93|5 years ago
Anecdote from Finland: in a personal conversation, one long-term union representative bemoaned that, until mid 2000s, companies considered unions as partners, consulted difficult staffing decisions with them, or at the very least felt obliged to justify the reasoning behind companies' decisions. After the crisis, the mood all changed - spending cuts, layoffs or any changes to salaries or benefits are now presented as a done deal from higher up, any union negotiations are treated as a mere formality.
raiflip|5 years ago
The reason no other explanation makes sense to me is that any purely market based explanation, like energy or China, we would see a corresponding drop in US labor force productivity, but the whole point is that that productivity did not drop.
One question i have for you is, why didn’t the union just fight the cuts? A union is not a nicety granted by the corporation, its whole reason to be is to fight corporate power when needed. It sounds to me like that union was already made powerless by the time the crisis occurred.
Fazel94|5 years ago
xeromal|5 years ago
raiflip|5 years ago
TwoBit|5 years ago
raiflip|5 years ago
You can see union membership was on the decline since the 1950s, but it accelerated around the 70s. It is hard to see the timeline in that graph, in this one it is harder to see the acceleration, but it is easier to see the timeline: https://rpubs.com/jncohen/uniondensity