AMERICAN WORKERS used to be able to assume a rising standard of living; each year would be better than the last. They can no longer be so confident. Wage rates in the society are flat, and have been for some time. The great question for this and future Labor Days is whether this is an aberration or the new permanent condition. What should our expectations be?
Though masked by other numbers pointing to prosperity, the change has been dramatic. In the 20 years from 1947 to 1967, the average hourly wage adjusted for inflation -- the value of an average hour's work -- rose 58 percent. For the past 20 years the figure is essentially unchanged. It rose until the first oil shock of 1973-74, then fell back. Today this measure of well-being is precisely where it was in 1968.
Families have compensated. More women are working and having fewer children, so that the ratio of workers to dependents has changed. The elderly are better supported by Social Security; wages fell behind inflation in the 1970s, but benefits were indexed and did not. Thus the family and per-capita income figures don't reflect what has happened.
But while families are gaining, workers are spinning their wheels. Economists Frank Levy and Richard Michel have traced the earnings histories of successive generations of prime-age men. The average 30-year-old man in 1949 had an income of $12,000 in 1984 dollars. By the time he was 40 his income had risen in these inflation-adjusted terms to more than $18,000, and by the time he was 50, to more than $24,000.
The pattern continued through the 1960s. The average man who was 30 in 1959 had an income of nearly $17,000 then, and more than $25,000 by 1969. But then it fell apart. The typical 30-year-old man in 1973 had an income of just over $23,000; 10 years later it had not changed. The typical 40-year-old had just over $28,000 in 1973. Ten years later he had lost ground; his income was $24,100.
No one knows all the reasons for this. The oil shocks played a major part, greatly accelerating inflation while reducing and creating enormous shifts in demand. Loss of markets to lower-wage competitors abroad has also been a factor, as may be the continuing shift to a service economy. There has been a crowding of the labor force through the simultaneous entry of the baby boomers and more women workers. This may have helped bid down the price of labor; it also means that a greater percentage of workers is young and still on the lower rungs of the wage ladder. Atop all this tumult, to some extent reflecting it, has been a decline in productivity. For many reasons, much debated, the hourly output of the average worker is not rising as fast as in the past -- and that is the final determinant of standard of living.
The interesting thing about most of these factors is how little they seem to have to do with the remedies of conventional politics. Bills are pending in Congress to raise the minimum wage, which has not been increased since 1980. We're in favor of the increase as a matter of simple justice. But it is only an ameliorative device; no one should be fooled into thinking it will transform the economy. So also with the workable parts of the trade bills the two houses have passed. The worst news for workers this Labor Day may not be how weak wages have been, but how little is understood about how to strengthen the