Capitalism and Good Management Lowered Wages
Return to Quick Economics Notes Updated 2/14/18   Please link, use to educate and 

1. Quick History of US Wages    2. Capitalism an Good Management Lowered Wages

3. Top Companies Have Done Very Well     4. The Process Continues


1. Quick History of US Wages

Farmers of the late 19th century faced  lowering income
caused by increased supply caused by technology and foreign produce.

Low prices helped everyone but farmers who were
forced into a new difficult manufacturing life style.

Unions, politicians and education helped but it took 50 years.

Manufacturing Workers of the late 20th century faced decreasing waged
caused by low demand resulting from technology and foreign produced goods.

Low goods prices help everyone but manufacturing workers who were
force off into low paying services or a dependency lifestyle.

Weak unions, dysfunctional politicians and academic education
have not helped
but its only been 45years.

See World Changed and Good Jobs Disappeared



2. Capitalism an Good Management Lowered Wages

Beginning with economic expansion caused by WWII, demand for U.S. manufactured
goods increased dramatically.  As a result, demand increased and high profit resulted.
Thanks in part to Unions, these manufactures shared  their large profit with unionized
workers and wages increases spilled over to many nonunion workers. It took Germany,
England and Japan many years to repair war damaged manufacturers and bring an
end to U.S.  manufacturer's monopoly power.


3. Top Companies Have Done Very Well
especially after the Dot-Com bubble
which also helped average companies that had slowly grown profit.
Poorer companies had been slowly losing profit and they have just managed
to recover pre-recession profit.

With most companies doing well managers did well as did many hourly
workers. The large food services industries and drinking place workers
did not do well. An Alan Binder study of 2003-2012 wages is interesting.



4. The Process Continues

Serious competition from foreign manufacturers beginning with automobiles and steel increased supply causing Rust Belt Industries to lose their pricing power.  This lowered profit. Some industries incurred a loss as supply increased too much. Wage give backs began and many workers found themselves with stagnating wages. Companies used technology and outsourcing to be more competitive and maintain profit but this put more pressure on wages.  Many more wage types stagnated.

Is Capitalism to Blame for Middle-Class Plight

US Economic Normality 1945-2015
#1 Rising Income
#2 Increased Foreign Competition Began 1970's Wage Stagnation
#3 1980's Failing Manufacturing Brings Less Financial Regulation
#4 History of U.S. Financial Bailouts and Economic Recovery 
#5 Poverty Stuck at 15% 
# 6 Profit Growth Beats Wage Growth
#7 Wellbeing Continuing Growing

Post WW2 International Economic Competitive Adjustment