justed for inflation, per capita disposable income
rose by 18 percent and consumption rose by 20 per-
cent during the decade. Part of this increase occurred
because incomes from property and self-employment
rose more than did labor incomes. These forms of
income went mainly to wealthier families. Even so,
inflation-adjusted median family disposable income
(a better measure of the experience of the overall
population than is average, or mean, income) rose
by about 8 percent. This increase occurred mainly
because a higher proportion of the population was
working. The unemployment rate declined substan-
tially, from 7 percent in 1980 to 5 percent in 1989.
Labor-force participation (as a percentage of the
population aged sixteen and over) rose from 64 per-
cent in 1980 to 67 percent in 1989.
Government data indicated that 13 percent of the
population had incomes below the poverty level in
- This increased to 15 percent in 1982-1983 as
a result of the recession, then returned to about
the initial level by 1989. Poverty was higher among
female-headed households and in African American
families: As a result, about one-half of African Ameri-
can, female-headed households were in poverty dur-
ing the decade. The federal statutory minimum
wage had been raised several times during the infla-
tionary 1970’s. These increases had resulted in its
reaching $3.35 per hour in 1981, where it remained
until April, 1990, when it increased to $3.80 per
hour.
An important source of rising property income
during the 1980’s was high interest rates. Interest and
dividend income rose from 15 percent of personal in-
come in 1980 to 18 percent in 1989. Much of this
wealth accumulated in the pension-fund assets of
people still working. The U.S. labor market passed a
watershed at the end of 1979: Employment in manu-
facturing reached a peak and began a slow decline.
Manufacturing output continued to rise, but produc-
tivity was rising even faster, meaning that fewer work-
ers were required to do the same amount of work.
The result was a much-lamented erosion in the avail-
ability of production-line jobs with good pay. Such
jobs were desirable, because they were accessible to
persons with only a high school education. A large
proportion of the 17 million additional jobs created
in the 1980’s were in the trade and services sector.
Unions The shift in employment also meant a de-
cline in the relative importance of union membership.
Membership in unions affiliated with the American
Federation of Labor-Congress of Industrial Organi-
zations (AFL-CIO) was relatively constant over the
decade, but such other traditional stalwarts as mine
workers, auto workers, steel workers, and garment
and textile workers all showed significant declines
in union membership. In the automobile industry,
several Japanese manufacturers opened facilities in
the South. These were generally non-union; several
of the host states had “right-to-work” laws, which pro-
hibited making union membership a condition of
employment. The new plants were thus able to oper-
ate with far lower labor costs than were the Detroit-
based Big Three automakers.
Union membership took a major hit in 1981. In
August of that year, thirteen thousand members of
the Professional Air Traffic Controllers Organiza-
tion went on strike after rejecting a government con-
tract offer. President Ronald Reagan dismissed the
strikers, and many of their jobs were filled by new-
comers. The publicity generated by the strike and its
eventual defeat significantly harmed the public per-
ception of unions. Union leaders became convinced
that good jobs were being lost in the United States
because of competition from imports and that wages
were being held down by immigration. They lobbied
hard for restrictions on both imports and immigra-
tion, but without much success.
The upstart Service Employees International
Union, led by Andy Stern, was able to recruit aggres-
sively among low-income workers such as janitors and
custodians. Union membership expanded among
people working for government, particularly school-
teachers and employees of state and local govern-
ments. Nevertheless, the favorable macroeconomic
conditions of the 1980’s led to much fewer work
stoppages than had occurred in the past. In the
1970’s, there had been more than two hundred stop-
pages per year. After 1982, the number fell well be-
low one hundred.Impact Many Americans benefited from the de-
cline of inflation and the strong labor market that
prevailed after 1982. However, real wages either de-
clined or stayed relatively constant, depending on
how one interprets the price indexes. The average
household did enjoy a modest increase in real in-
come, but it had to do more work to get it. The most
significant income benefits of the decade went to
families that were already earning more money, andThe Eighties in America Income and wages in the United States 511