한국정치 노트 Notes on the Politics of Korea

 In order to understand the dynamics of wage inequality, we must introduce other factors, such as the institutions and rules that govern the operation of the labor market in each society. 


To an even greater extent than other markets, the labor market is not a mathematical abstraction whose workings are entirely determined by natural and immutable mechanisms and implacable technological forces: it is a social construct based on specific rules and compromises.


 In the previous chapter I noted several important episodes of compression and expansion of wage hierarchies that are very difficult to explain solely in terms of the supply of and demand for various skills.


 For example, the compression of wage inequalities that occurred in both France and the United States during World Wars I and II was the result of negotiations over wage scales in both the public and private sectors, in which specific institutions such as the National War Labor Board (created expressly for the purpose) played a central role. 


I also called attention to the importance of changes in the minimum wage for explaining the evolution of wage inequalities in France since 1950, with three clearly identified subperiods: 1950–1968, during which the minimum wage was rarely adjusted and the wage hierarchy expanded;


 1968–1983, during which the minimum wage rose very rapidly and wage inequalities decreased sharply; and finally 1983–2012, during which the minimum wage increased relatively slowly and the wage hierarchy tended to expand. At the beginning of 2013, the minimum wage in France stood at 9.43 euros per hour.





In the United States, a federal minimum wage was introduced in 1933, nearly twenty years earlier than in France. As in France, changes in the minimum wage played an important role in the evolution of wage inequalities in the United States. 


It is striking to learn that in terms of purchasing power, the minimum wage reached its maximum level nearly half a century ago, in 1969, at $1.60 an hour (or $10.10 in 2013 dollars, taking account of inflation between 1968 and 2013), at a time when the unemployment rate was below 4 percent. 


From 1980 to 1990, under the presidents Ronald Reagan and George H. W . Bush, the federal minimum wage remained stuck at $3.35, which led to a significant decrease in purchasing power when inflation is factored in. 


It then rose to $5.25 under Bill Clinton in the 1990s and was frozen at that level under George W . Bush before being increased several times by Barack Obama after 2008. At the beginning of 2013 it stood at $7.25 an hour, or barely 6 euros, which is a third below the French minimum wage, the opposite of the situation that obtained in the early 1980s (see Figure 9.1). 


President Obama, in his State of the Union address in February 2013, announced his intention to raise the minimum wage to about $9 an hour for the period 2013–2016.


 Inequalities at the bottom of the US wage distribution have closely followed the evolution of the minimum wage: the gap between the bottom 10 percent of the wage distribution and the overall average wage widened significantly in the 1980s, then narrowed in the 1990s, and finally increased again in the 2000s. 


Nevertheless, inequalities at the top of the distribution—for example, the share of total wages going to the top 10 percent—increased steadily throughout this period. Clearly, the minimum wage has an impact at the bottom of the distribution but much less influence at the top, where other forces are at work.




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