FDR and Labor: Earning Our Way Out of the Great Recession

In a recent editorial in the New York Times, former Labor Secretary, Robert Reich, writes that this Labor Day promises to be one of the worst in decades. Organized labor, he notes, is down to a mere seven per cent of the private work force; unemployment remains high; and the prospects for a further recovery of the economy remain uncertain at best. Professor Reich goes on to argue that this dismal state of affairs is unlikely to improve until we address the deep structural flaws in our economy; flaws which have made it impossible for the American consumer -- i.e. the middle class American worker -- to sustain the level of spending needed to keep our economy going.

He rightly blames this state of affairs on the steady decline in working wages that has occurred in the past three decades as US companies brought in new labor-saving technologies or shipped jobs to non-unionized low wage areas overseas. He also correctly points out that much of the economic growth that the US has experienced since the early 1990s -- growth that occurred in spite of the fall in wages -- was fueled by three basic phenomenon: the vast increase of women in the work force; an increase in the number of hours people worked to make up for lower wages; and the massive use of consumer debt, fueled in part by the housing bubble.

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