Evolution Shift
A Future Look at Today
February 28th, 2022

The 2020s: The Pendulum Swings Back to “Labor” and Employees

The 2020s is the decade of increasing power to Labor and Employees.  There will be much more evidence of this in 2022.*

 

There are a number of reasons why this will occur.  The first, and possibly most significant is that this is cyclical.  This reverses a trend of ever downward household income that began in the 1970s, so this is a big swing of the pendulum between employers and employees.  The Great Recession followed by the pandemic transitioned vast numbers of the middle class into the working poor in the U.S.

One way to see this is to compare the cumulative growth of U.S. household income from 1967-2019 by quintile.  The two lower quintiles – 40% of the population -could be considered the lower or working classes and increased the mean household income by around 38%.  The third and fourth quintiles – again 40% of the population- the middle class, increased by 42% and 65% respectfully.  The top quintile increased by 110%.  The top 5% of U.S. households increased by 140%.**

This is clearly a sign of the growing income inequality in the country during this 50-year period.  If you consider the bottom 60% of households to be the most dependent on wages and wages only it is clear that working wages have not kept up with the other 40% of households.

The numbers that really highlight how little wages have increased in the last 50 years is to look at the minimum wage.  The highest the U.S, minimum wage has ever been relative to the cost of living was $1.60 in 1968.  Run that number through the Inflation Calculator and you get $12.82 for 2022.  The current federal minimum wage is $7.25, not having risen since 2009.  So, the minimum wage today is 56% lower relative to the cost of living as it was in 1968.

States are attempting to change this.  Florida has a $8.56 minimum wage and that will go up by the end of the year to $11.00.  18 states have no plans to increase the minimum wage from $7.25 this year.  The states with the highest minimum wages for 2022 are: CA $15, MA $14.25, NY $13.20, New Jersey $13, AZ $12.80 ME at $12.75 and CO at $12.56.  These are the only states that meet the $1.60/1968 equivalence. 

Yes some of this is due to the cost of living, but not that much.  Of the five cheapest states, four of them are at $7.25, but AK is the fourth cheapest state but has a 2022 minimum wage of $11.  Do you think that with “the Great Resignation” and the ever-growing increase in  nomadic digital workers that people would not consider moving to a state with same living costs but a much greater minimum wage? I submit that this current fluidity of the work force in terms of place will soon bring the states with $7.25 in line, or else they will lose workers.

As a boomer I remember the power of the unions in the 1950s, 1960s and 1970s.  Strikes were big news.  Unions represented significantly more people and percentage of the work force than they do now.  As part of the forecast at the top of the column I wrote that:

“Union strikes, an often reported phenomenon decades ago, will increase significantly in 2022, primarily in the service sector”

 So far this year there has been news of union organizing at Starbucks and Amazon, and this will spread widely in the months ahead.  For any of you that instinctively react negatively to strikes, I ask you to temper that reaction with the above historical numbers.  The pendulum swings back to employees and workers only because of the huge evisceration of wages the last 50 years.

For those of you that instinctively support Labor and a “living wage” you will see this growing effort to be what it is, a rightful correction of the past.

There is one more point to make that I think important.  We can all remember back to 2020 when we all huddled indoors and relied on ‘essential workers” to risk the virus for us as retail workers, delivery people, even medical workers.  We praised these essential workers as heroes and beat pans and waved to them.  Then of course we asked them to keep working at their same low wages and many of them quit, citing this very hypocrisy.

To remain a great nation America must understand that a living wage, the ability to provide for the household, the ability to purchase, consume and participate in our capitalistic society is reliant in part on a thriving middle class and even lower class.

In addition, if we want to be less reliant on other countries to produce our goods then our wages must increase.  One can’t be for “on-shoring” without supporting the workers that will allow us to do so.

I grew up in an America having learned that “WWII was won on the factory floors of Detroit” The increasing tension with China points to this as a phrase to keep in mind.

 *A forecast that I put in “A Look Into 2022 – A Split Screen Year” [ https://www.amazon.com/Look-Into-2022-Split-Screen-ebook/dp/B09PQV8ND7/ref=sr_1_1?crid=K8NBRY7MJP68&keywords=a+look+into+2022+a+split+screen+year&qid=1642680908&sprefix=a+look+into+2022%2Caps%2C110&sr=8-1 ]

 

** https://www.advisorperspectives.com/dshort/updates/2021/10/25/updated-u-s-household-incomes-a-50-year-perspective

 

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