At one time it was an economic tenet for America's worker: Work smarter, better, faster and harder and you’ll reap the rewards. That’s exactly what America's workers have done for the past four decades plus. But while worker productivity has soared, workers’ wages have been tightly tethered to the ground. So much that economist Dean Baker writes:

If the minimum wage had risen in step with productivity growth [since 1968], it would be over $16.50 an hour today. That is higher than the hourly wages earned by 40 percent of men and half of women. 

We’ve said it for years. Because of the “Union Difference”—fair wages and better benefits for workers who belong to a union—unions are the ticket to the middle class. Even if you don’t belong to a union, there is a spillover effect to the whole economy. In other words, when unions are strong, everyone benefits. But don’t take our word for it, here’s what Time magazine contributor Eric Liu says:

The fact is that when unions are stronger the economy as a whole does better.

Tomorrow, western New Yorkers will take a bus from Buffalo to Albany to call on the state's leaders to raise the minimum wage. 

At $7.25 per hour, New York's minimum wage remains decades out of date.
 A full-time minimum wage worker earns just $15,080 per year in New York—far less than what is needed to afford the state's high cost of living. 

This is the second of a four-part series describing what went wrong with America’s economy and how to fix it. See Part 3 tomorrow and read Part 1: "Tell Us What You Think: What’s Wrong With the U.S. Economy? The Real Scoop"—and please leave a comment to tell us what you think. (Click the chart to enlarge.)

If the short answer is “we’re still recovering from the Crash of 2008,” the long answer is “there was obviously something wrong with the economy long before the Crash of 2008.” 

There were obvious warning signs during the Bush years that should have set off alarm bells.  Most importantly, wages and middle-class family incomes were dead in the water.  The median income for working-age families started falling in 2000 and never recovered during the 2001-2007 recovery.

The middle class is the great engine of the American economy, but that engine is sputtering. Today, the National Employment Law Project (NELP), the AFL-CIO and more than a dozen other worker advocate and economic research organizations are proposing “10 Ways to Rebuild the Middle Class for Hard Working Americans: Making Work Pay in the 21st Century.”

Nearly one-quarter of America’s workers are in bad jobs—and the number is climbing, according to a new report by the Center for Economic and Policy Research (CEPR). “Bad Jobs on the Rise” defines a bad job as one that pays less than $37,000 a year—the inflation-adjusted earnings of a typical male worker in 1979—and offers no health insurance or retirement plan (click on chart to enlarge).

Several new economic reports out in time for Labor Day point to long-term trends that are driving a declining standard of living for America’s middle- and low-income workers. Here’s a quick summary (click on chart to expand).

Now that the Republican National Convention—with its divisive policies, masked by a cynical call for unity—has wrapped up, let’s take a look at the deeply embedded anti-union and anti-worker philosophy in the Republican platform of Mitt Romney and Paul Ryan. Daily Kos’ Laura Clawson says:

The basic message of the Republican platform on labor issues is this: Rights are there to be taken from workers and given to the 1 percent.

The U.S. public is painfully aware of the growing income inequality in this nation.

Now, a new report shows a big reason why the gap is growing: fewer workers in unions.

Declining unionization was responsible for roughly one-third of the growth of wage inequality among men from 1973 to 2007, a new Economic Policy Institute (EPI) report finds. Declining unionization can explain roughly one-fifth of the growth of wage inequality among women over the same period (click to enlarge chart).

The Federal Reserve recently adopted a two percent inflation target, reports Thomas Palley, AFL-CIO senior economic policy advisor. The Fed should be looking at policies that improve wages, not ones that will undercut the possibility of future wage increases and make it more difficult to achieve full employment, Palley writes In an Op-Ed published in the Economists' Forum blog titled, "The Fed's 2% Inflation Target Trap."