There are three broad factors that explain this negative situation for workers. Firstly, the fall of the Berlin Wall and China’s embrace of the global trading system saw over a billion workers enter the global economy. This greater competition amongst workers depressed wages for most workers around the world.
Secondly, work has become more skills intensive, implying higher rates of return for skilled workers and, in many cases, falling returns for lower skilled workers. These pressures were partly offset by lower-priced goods from China and from an abundance of credit for workers. Then came the financial crisis; a direct result of global imbalances and an excess of credit in advanced economies.