For your Labor Day, here is a thoughtful op-ed piece by Robert Kuttner in the Boston Globe:

For workers, it’s no holiday

THIS LABOR DAY, America’s working families do not have a great deal to cheer. According to the new Census report on economic trends in 2006, median earnings for fulltime year-round workers last year fell by about 1 percent, even with a booming economy.

Only the most affluent one-fifth of US households had net income gains between 2000 and 2006. The rest had declines, despite productivity growth averaging about 3 percent per year. The share of people with health insurance provided by employers declined, as did those with guaranteed pensions. And all of this discouraging news happened before the current financial turbulence.

Housing values have now gone into their worse tailspin since the Great Depression. Even if the Federal Reserve manages to contain the effects on the broader economy, America remains on a course where the biggest gains go to a narrow elite, and ordinary people face increasing insecurity.

How did this happen?

Although education gaps are sometimes cited as the cause of widening inequality, America had much more broadly distributed prosperity in the 1940s, 1950s, and 1960s, a period when more people failed to complete high school than earned college degrees.

But what America did have in that era was a set of opportunity institutions. A much larger fraction of workers were members of trade unions. The minimum wage was much higher in its real purchasing power. More sectors of the economy were regulated, and one benefit for workers was that industries such as airlines and public utilities competed on the basis of quality and innovation, not by cheapening wages or relying on outsourcing.

Insider enrichment, of the sort that has sent executive pay into the stratosphere, was discouraged both by custom and by public policy that limited conflicts of interest. Corporations tended to offer steady, long-term employment rather than using temps, contract workers, and shifting work overseas. A higher rate of public investment in public infrastructure and research and development also generated lots of decent jobs.

So there is nothing inherent about the “new economy” that prevents us from having the more broadly shared prosperity that Americans once enjoyed. We just need a dramatically different set of national policies. [full text]