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How Shocking, Harold Meyerson Is Spouting Nonsense

Harold Meyerson wants to tell us all that it wasn’t the benevolent corporation that raised the workers’ wages, it was in fact union power. That’s what explains the rise in wages in the US post-WWII. And the decline in union membership since the 1970s is why wages haven’t been rising since. The correct answer to which is nonsense Harry. For we can actually look at union density across countries and compare that with how the workers’ wages rose. And there just isn’t a correlation there. Some places have had rising wages with falling union density, some the other way around, some neither correlation.

The actual correlation we’ve got is that when there’s significant economic growth wages go up significantly, when there ain’t they don’t. And that’s about it.


[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]What you won’t find in Leonhardt’s column is any mention of unions, which renders this analysis akin to Hamlet without the prince. The fact that unions represented one-third of the American workforce when Benton penned his piece, and a good deal more than one-third at major corporations, was overwhelmingly the main reason why corporations compensated their workers more fairly then than they have in recent decades.[/perfectpullquote]

Sure, that’s something we can postulate but that’s also something we’d have to test. Correlation does not prove causation after all.

The easiest way to test being to look at what happened in other countries. Which we can do here. We’ve only got back to 1960 (fiddle a bit with fourth line down, “year”) but we’re really not seeing that correlation.

Sure, union density was greater in the earlier years, lower in the later. Yes, growth was higher in many places earlier than later. But then we had almost no economic growth 1929 to 1945, so we would expect a certain bolus of it to turn up after that – we’re still in correlation not causation here. The growth turned up just when we happened to have lots of unions. It’s the places which grew strongly out of this time period that interest.

Ireland, for example, went from 45 % up to near 60% unions in the late 1970s. Growth really started to turn up in the late 1980s, when union density was falling and falling fast. South Korea’s never really had a union density above 15% and yet the place has gone from starving peasantry to first world status in the past 40 years. Italy today has more union workers than it did in the days of Il Sorpasso. Italy not having had any GDP increase per capita to speak of in the past couple of decades to accompany that higher union membership.

The point being not that I’m trying to prove that unions prevent economic growth although I’d give that a damn good try if pressed. Rather, it’s that there’s nothing other than correlation to Meyerson’s assertion that it was unions that created the growth or raised the pay. Sure, post WWII had high growth, it had lots of unions. But what happened concerning unions in other places that had high growth but not immediately post-WWII? The truth being that we cannot see any correlation there. So, the earlier linkage seems to be just correlation. We had growth, we had unions, one didn’t cause the other.

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5 years ago

I’d have a stab at “low growth causes low pay rises, causes increase in Union membership, high growth causes high pay rises causes decline in Union membership” also “monopsonies cause rises in Union membership, dissolving monopsonies cause a fall”
Because the more desperate people are for a pay rise the more likely they are to join a union, and if they’re under a monopsony a union is their only chance.
Monopsonies like monopolies are bad for growth.

Jonathan Harston
Jonathan Harston
5 years ago

And there’s that weasel word again, “fair”. Define “fair”.

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