We Have a Distribution Problem
Working people are doing well. They're also getting robbed.
One of my favorite quotes about the labor movement comes from Eugene Debs. In 1904, he wrote:
Ten thousand times has the labor movement stumbled and fallen and bruised itself, and risen again; been seized by the throat and choked and clubbed into insensibility; enjoined by courts, assaulted by thugs, charged by the militia, shot down by regulars, traduced by the press, frowned upon by public opinion, deceived by politicians, threatened by priests, repudiated by renegades, preyed upon by grafters, infested by spies, deserted by cowards, betrayed by traitors, bled by leeches, and sold out by leaders; but, notwithstanding all this, and all these, it is today the most vital and potential power this planet has ever known and its historic mission of emancipating the workers of the world from the thralldom of the ages is as certain of ultimate realization as the setting of the rising sun.
Though this passage ends on a rousing note of inspiration, it spends most of its words laying out an equally familiar characteristic of the labor movement: disappointment. In doing so it captures the reality of the experience of labor struggles. Cops! Sellout politicians! Shitty reporters! Traitors! And yet, after all of it, a core of certainty that victory will, one day, be ours. I often recite this quote at the end of speeches about my book. In a single sentence, Debs describes both why the struggle will suck, and why you should keep on struggling regardless.
The systematic effort to stomp out organized labor power in America since the end of WW2 has been very successful. We’ve gone from a high of one in three workers being union members in the 1950s, to a paltry one in ten today. This decline has been engineered by business interests, mostly using money and political power. Part of the battle is waged on an intellectual battlefield as well: The effort to spread the idea that the free market produces prosperity, that unions break that free market and thereby make everyone poorer, and that working people will achieve their own prosperity more effectively by riding the rising tide of booming business than they will by organizing into unions.
A new report from the Economic Innovation Group that sums up the economic state of the average American worker is worth talking about in this context. (To be clear, this is not a right wing smear product—it’s a credible report, and its conclusions should be reckoned with honestly.) The report’s findings, in brief, are that American workers today are doing better than ever by many economic measures. They are making more money while working fewer hours; they are working two jobs and changing jobs less frequently; working class poverty and unemployment hover around all time lows; serious workplace injuries are rarer than ever; and surveys show that the vast majority of workers say they are at least moderately satisfied with their jobs, with only 13% saying they are dissatisfied. Since 1980, the median hourly wage has grown by 36% in real terms. Furthermore, the middle class wage stagnation that characterized the years from 1980-1993 is now over. For the 30 years since 1994, wages have been rising steadily once again.
Even ignoring some wonky methodological debates that can push the specific numbers up or down depending on exactly what you measure, the report shows that average American workers are doing better in absolute material terms today than they ever have. (Which, by the way, is what we would expect in an economic system that prioritizes growth above all!) Now for the complications. Although workers are doing well today in absolute historic terms, their rate of progress has slowed distinctly. Consider: “From 1950 to 1979, cumulative [average hourly earnings] grew by 57.3 percent for an annualized rate of 1.6 percent. This dwarfs the 1980 to 2023 period, during which AHE grew by an annualized rate of only 0.7 percent, for a total increase of 36.7 percent.”
This slowing rate of advancement has occurred even though the productivity of American workers has kept right on up in a straight line. Whereas the productivity of workers and their wages, for many decades, moved in tandem, those two measures became decoupled right about when Reagan took over. This divergence has been widely discussed for years now, and shows up in this latest report as well, as illustrated by this chart:
What this indicates is a persistent tendency over the past 50 years for capital to take more than its fair share of what is being produced. And that, I think, goes to the heart of how we should think about the findings of this report.
For those of us who believe that rebuilding the power of organized labor is one of the most important tasks in this country, it is not necessary to constantly deny that working people are making any economic gains. We don’t have to become the economic equivalent of climate change deniers, covering our ears and declaring that everyone is unemployed or working two jobs and starving when the best available measurements show that that is not the case. This fairly apolitical report shows that the average American worker is, by most key economic measures, doing better than ever before. It does not address the question of whether average American workers are doing as well as they should be doing.
Over the past 15 years or so, economic inequality has become a central issue in public policy. A common response to those of us who say that inequality is a crisis is to say: “The standard of living for workers is higher than ever. So what’s your complaint?” In this view, it doesn’t really matter how much wealth inequality exists as long as we are eradicating poverty and raising the average standard of living. The fact that Musk and Bezos have hundred of billions of dollars is a triviality compared to the fact that average wages are higher than ever.
I obviously do not buy that, and zeroing in on the chart above showing the gap between productivity and wages shows why. What we have broadly seen in the post-Reagan age of inequality is the rich taking more than their fair share of the wealth being produced. This is an extremely well-established fact. See, for example, this chart from the economist Gabriel Zucman:
What I am saying here is that any effort to discuss only the amount of wealth that working people have without discussing the distribution of wealth is a trick. America does not lack wealth. The problem is the distribution of that wealth. If working people get ten percent more productive, and the company gets ten percent more profitable, and the workers receive a five percent wage increase and then the executives and investors take the rest, then the fact that workers are doing better than they were before does not erase the fact that they just had half of the money that they were rightly due snatched away from them. If the ownership class wants to wage a successful class war, it actually makes sense to give workers enough to live decently—that decent standard of living is a wonderful mask for the fact that part of their gains are being siphoned off into the coffers of the rich.
There is no conflict between, on the one hand, a recognition that American workers are doing better than ever, and, on the other hand, a demand that the power of organized labor is the only thing that will allow them to regain their fair share of the economy. Inequality is a distribution problem. When I was younger, I knew a weed dealer who would sell unsuspecting people nickel sacks for ten dollars. If they complained, he would say, “So what? You’re still getting high, aren’t you?” That is essentially what corporate America is saying to workers. “So what we are keeping most of your productivity gains for ourselves, and paying the CEO $30 million? You’re doing better than you were before, aren’t you?” As is often the case, the scam in all of this becomes clear when you realize that multiple things can be true at once.
There is a separate question of how much of the wealth that American companies and, to a lesser extent, American workers themselves are accruing is a result of the exploitation of non-American workers. But we’ll leave that for another day. Today, we can all just practice getting comfortable holding several things in our head at once: Times are better than they were before. But the rich are taking more than their fair share. To fix that, we need more unions. Otherwise, the skim of the working class’s wealth by those at the top will just go on and on. Higher wages and lower poverty are worth fighting for, but so is fairness and equality. It’s the distribution, baby.
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One point that the aforementioned report makes clear is that the price of housing is a disproportionate driver of the runaway cost of living that holds back the improvement of working peoples’ standard of living. I wrote about that direct tie between housing and labor both here and here. Other related reading: Every Pay Bump Is an Admission of Guilt; To Whom Go The Spoils?; Capitalism’s Washing Machine.
I spent the past week on the road speaking about my book to activists and union people in Rochester and Louisville and Boston. The labor movement is booming! Get on board! We got the energy! In honor of all the people I met in the past week, let me recommend to you three good places to make a donation or otherwise support: The Coworker Solidarity Fund, which helps out Starbucks workers penalized for organizing; The Louisville DSA building fund, to help build a power base for the left in that city; and the Workers Capital Project, which works to find ways to help organized labor use its pension funds and other piles of capital to help the labor movement. You can order my book from an independent book store here, or email me if you’d like to buy an autographed copy for $40.
Substack keeps sending us emails urging us to “host a chat with readers” for the presidential debate tonight. Absolutely not. Regarding the debate, I will simply refer you to this. Then I will gently remind you that this publication, How Things Work, is solely supported by readers like you. If you enjoy reading it, please take a moment right now to become a paid subscriber. It’s cheap! Otherwise I will ultimately go broke and starve and this publication will cease to exist. I don’t like to be dramatic, but that is the world we live in. Thank you all for your support.
Plus the minimum wage has not been raised in decades.
One of the things I’m learning from reading about the early days of the New Deal is how many of the New Dealers emphasized that there wasn’t an issue of production, there was an issue of distribution (seen especially with things like agriculture and electricity generation). Glad to see a similar argument here!