Labor Day: The ’90s Revisited, in a Good Way

By August 28, 2007Economy

From Page 3 of the NAM Labor Day report:

This positive trend extends to other broader forms of worker compensation, including disposable personal income and hourly compensation, which includes employer-provided benefits. Real manufacturing hourly compensation has increased 3.4 percent over the most recent four quarters — the fastest pace in three and a half years. To some degree, this is a case of history repeating itself: it was not until the unemployment rate moderated over a similar four-year period (1992-1996) that real wage growth began to take place during the expansion in the 1990s.

Our bolded sentence, which brings to mind the arguments of Mickey Kaus, a reform-minded Democrat who writes on politics, economics, the media and lots of other stuff over at Slate.com. When discussing welfare reform or immigration policy, he reminds readers of a basic reality, that demand for labor increases wages, and the phenomenon was notable in the halcyon ’90s. His June 18th post at Kausfiles, really insider-blogball, but still interesting:

Update: I Rest My Case! Kevin Drum sneers about my “new role as champion of the common man,” arguing that if, in fact, chicken pluckers unionized and struck demanding $10 an hour I’d “denounce Democratic support for a strike like this.” I might! I think Wagner Act unions bring unnecessary inefficiencies, and wages (above the minimum) are generally best set by the market. If the market sets the wage at $7.50, the better way to boost the incomes of those workers is through the Earned Income Tax Credit, which I’ve consistently supported. But when the market raises wages above $7.50 — due to the sort of tight labor supply we had in the late 90s — I’m all for it.

So, an identifiable and welcome trend…

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