Fortune Archives: The American workers falling behind

In 1992, the journalist and historian Myron Magnet laid out in Fortunea stark divergence in the progress of the American worker. Even as real GDP per person had grown in the last two decades and, as he said then, “remains the highest in the industrial world,” the situation of the American working class had not measurably improved: “The paradox is that even as the worker’s success augments the national wealth, his own reward hasn’t kept pace,” wrote Magnet. “As another consequence of the new world economic order, his average real wages have stagnated, even declined.”

What caused this divergence? Magnet, a renowned conservative writer and thinker whose work later helped shape the policies of George W. Bush, offered an answer: “The shock waves in manufacturing—the givebacks and two-tier wage scales of the past decade, the decline of union strength, the drop in manufacturing from a quarter to around 16% of total U.S. employment—spread into the service sector too. Other domestic employers of relatively low-skilled labor no longer had to compete with high-paying factories to attract workers.” 

The gap between workers’ productivity and their reward for that work has grown to a chasm since Magnet examined it. As the left-leaning Economic Policy Institute (EPI) found, America’s nonsupervisory workers’ productivity increased 80.9% between 1979 and 2024, while their hourly pay increased just 29.4%, meaning that productivity grew 2.7 times as much as pay.

Magnet was critical of unions, but the pro-labor EPI points to some of the same reasons that he cited for this sorry state of affairs—and some additional ones: “Excess unemployment was tolerated to keep any chance of inflation in check. Raises in the federal minimum wage became smaller and rarer. Labor law failed to keep pace with growing employer hostility toward unions. Tax rates on top incomes were lowered. And anti-worker deregulatory pushes—from the deregulation of the trucking and airline industries to the retreat of anti-trust policy to the dismantling of financial regulations and more—succeeded again and again.”

This week, America is processing the dynamics that led to the return of Donald Trump to the White House, carried on a wave of dissatisfaction with the status quo expressed by blue-collar Americans who have seen their economic security decline and aspirations dashed. It’s worth considering, in this context, the gap that Magnet observed in 1992, and his prescriptions for improving the situations of American workers—which put much of the onus on the business world: He urged companies to focus on training, respecting, and listening to the workers themselves.

“Look through workers’ eyes,” he implored readers, “and see how deeply the way they are managed affects their sense of whether they can do their best.”