In the mid-1970s, faced with falling profits and intensified competition, many businesses chose the “low road” of confrontation with labor in an attempt to squeeze wages and benefits. David M. Gordon has argued that this shift in corporate strategy, rather than changes in technology or trade, is the primary cause of the decline in real wages and the increase in income inequality of the late twentieth century. The chapter selected here provides a more detailed look at the “low road” strategy, describing three key institutional changes that resulted from this strategy and estimating their quantitative impacts.
