The economy has been bad to both public and private-sector workers

Posted at 02:24 PM ET, 03/15/2011

By Ezra Klein

Source: Economic Policy Institute

The great trick of the last few years has been convincing private and public-sector workers that their interests somehow diverge from one another. Public workers look at the rising pay in the private sector and ask why they can’t have that. Private workers look at the benefits in the public sector and fume about the underfunded 401(k)s they’ve been left with. But as Larry Mishel and Heidi Shierholz write, the truth is both more upsetting and less divisive. “Neither private-sector workers nor state and local government employees have seen their pay rise much over the last two decades, and what meager pay growth they have experienced has been far outpaced by growth in productivity — the increased goods and services that they themselves have generated.”

The numbers are pretty stark. Between 1978 and 2009, the hourly wage for the median worker grew by only 10.1 percent — and most all of that came between 1996 and 2002. Meanwhile, productivity grew by 80 percent. More growth hasn’t translated into better wages, and that’s been true for both private and public-sector workers, and both skilled and unskilled workers (as you can see in the graph above).

There are a number of reasons for this. A lot of the money that would’ve gone into wages went into health-care costs — but our health didn’t improve by very much. The rich began demanding bigger salaries and lower taxes and managed to get both. Unions have weakened. Profits in the economy tilted away from sectors that shared gains widely, like manufacturing, and towards sectors, like finance, that concentrated them narrowly. Some think central bankers have been so obsessed with inflation that they’ve hewed to overly tight policies for most of the last 30 years.

But whatever your explanation, or bunch of them, it’s been happening to workers in both the public and the private sectors. The effort to raise one or another up as a privileged class is smart politics on the part of those who want elections dominated purely by corporations, but it doesn’t point toward any answers for either group. Quite the opposite, in fact. The Walker agenda — which plenty of other governors would like to emulate — is to take both benefits and power away from public-sector employees, and then use the political space opened up by weakening unions to tilt policy toward corporate interests and away from poorer constituencies. That’s a world in which both private and public-sector workers end up worse off.