Labor Market in United States of America

This chapter uses the framework of institutional change outlined in the previous chapter and applies it to a case study of US labor institutions. Firstly, it surveys US labor institutions in their formal, informal, and avoidable iterations. In terms of formal institutions, the traditional orientation of the USA was softened in the 1930s through the labor components of the New Deal although many of these rights have been reduced in subsequent decades. In terms of informal institutions, the collective bargaining structure is decentralized and both bargaining coverage and union density, never high to begin with, are consistently dropping. In terms of avoidable institutions, it seems that many employers are able to habitually ignore even the modest regulation in place. Also, a potential result is a very high-income inequality, with no strong union presence to cause similar wages. Secondly, this chapter examines the possible drivers of change. Institutional change in the case of the US labor institutions 1980–2019 seems to point to a continued deregulation of an already relatively deregulated system. This chapter argues for the role that the systemic cycle and the extensive developmental strategy played in causing this type of stable change alongside path dependence.