The decline of unions, outsourcing, off-shoring, politicians who are bought and paid for by corporate kingpins — all of these factors and more have resulted in levels of employee pay that would have sickened our parents and grandparents:
For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling. That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages.
Back in 1914, Henry Ford announced he was paying workers on his Model T assembly line $5 a day – three times what the typical factory employee earned at the time. The Wall Street Journal termed his action “an economic crime.”
But Ford knew it was a cunning business move. The higher wage turned Ford’s auto workers into customers who could afford to buy Model T’s. In two years Ford’s profits more than doubled.
That was then. Now, Ford Motor Company is paying its new hires half what it paid new employees a few years ago. The basic bargain is over – not only at Ford but all over the American economy.
New data from the Commerce Department shows employee pay is now down to the smallest share of the economy since the government began collecting wage and salary data in 1929. Meanwhile, corporate profits now constitute the largest share of the economy since 1929.
1929, by the way, was the year of the Great Crash that ushered in the Great Depression.