Jim wrote
>Though this is true, it is very abstract. The phenomenon of the
>post-1973 stagnation of wages ...can be explained only at a lower
>level of abstraction. ...I would explain it in terms of the end of the
>nation-state-based "model" of capitalist accumulation which involved
>truces between the major classes and sometimes explicit
>social-democratic "accords."
Jim, your 1973 dating might be off.
It is possible that wage decline has its roots BEFORE the 1973 oil shock.
And I'm starting to think that the federal government had more to do with
real wage decline than I once thought.
Federal government inaction/action led to the erosion of the real wage floor
and to a lowering of the ceiling already by early 1973 before OPEC entered
the scene.
Low wage industries (e.g., retail industries) were hurt by the failure of
the minimum wage to keep up with inflation from 1969 and later. Between 1968
and early 1973 the real minimum wage fell by 20% in real terms and this was
all caused by domestic inflation rather than by OPEC/food inflation of 1973.
Federal government minimum wage increases kept the real value of the minimum
wage through the rest of the 1970s at about its early 1973 levels. (The
1980s were a different matter of course). It was over 1968-1973, then, that
low wage workers found that the floor under them sunk sharply.
And, then, the government more-or-less went after the construction industry
in the early 1970s. The 1971 wage/price controls were designed to reverse
the real wage gains of construction workers and where successful in
achieving this goal. Construction workers were, importantly, the highest
paid-and possibly strongest-group of workers by the late 1960s.
So, even before the 1973 oil/grain shock real wages at the top and at the
bottom of the scale were falling.
(Finance, insurance, and real estate workers-who typically earned in the
middle range of real wages--also started to experience stagnant wages by
1971 but I don't know yet why this was the case).
I'm not saying that the 1973 prices increases didn't play a role - they
obviously did - but the ground for real wage decline was being set before
OPEC (as alleged productivity problems) entered the scene. Even without the
post 1973 inflations we might have seen real wages falling or, at the very
least, stagnating for some time due to forces already acting before 1973.
Eric
