Wages, neoliberalism, Piven and Cloward, bargaining theory


The political economy of the United States during the last thirty years has been described as neoliberal. Part of the neoliberal turn involves reducing or eliminating income support programs such as AFDC/TANF, waging war against organized labor, and increasingly conservative (i.e., neoliberal) public policies. Following an analysis by Lewis (2001) which showed that wages increased in response to higher average monthly AFDC payments, I update and expand this test of Piven and Cloward's bargaining power theory of wages by looking at other factors which may influence worker bargaining power: unions, interest rates, policy liberalism, and economic growth. I use time-series data on the U.S. covering 1965-2006 and find that AFDC/TANF benefits have a short-term positive effect on private-sector wages while declining union membership, punitive interest rate shocks, and increasingly conservative public policies have reduced the bargaining power of private-sector workers.

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