On Monday, New Yorkers join other Americans in celebrating Labor Day, a holiday created by unions here in 1882. Beyond the barbecues and the beach, the holiday is an opportunity to reflect on the state of American laborers and the labor movement that purports to represent them. American workers are actually doing pretty well, although one would never know it from the likes of the New York Times, while the unions themselves are on the skids.

The past week saw the release of data that paint a picture of thriving workers. On Tuesday, the Census Bureau announced that median household incomes in inflation-adjusted terms increased by 1.1% between 2004 and 2005, the first such increase since 1999.Yesterday, the federal Bureau of Economic Analysis released its own set of numbers on personal income, a measure that encompasses wages and salaries plus fringe benefits and investment and interest income.The number is continuing its push upward, increasing 7% over the past year.

Yet the Times started the week with a report on its front page about how real wages and salaries have been decreasing. The way the paper tells the story, “the median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standard — has risen steadily over the same period.” That news article was followed on Wednesday by a poll from a labor umbrella group, Change to Win, purporting to find that 51% of “workers” (meaning union members polled by the union) worry that wages are not keeping up with the cost of living.

It would be hard to characterize that assessment as other than stacked. The Times’s preferred measure, wages and salaries, ignores forms of compensation like health benefits or 401(k) contributions.It also doesn’t account for investment income or interest. For decades, such benefits have been moving from the “fringe” to become significant components in employees’ compensation. As a result, whatever is happening to wages, overall hourly compensation as calculated by the Bureau of Labor Statistics has consistently increased, even during the recession.

Nor is workers’ share of the American pie diminishing, as a George Mason University economics professor, Russell Roberts, has noted on the Café Hayek Web log. Although wages and salaries alone have been declining in proportion to GDP, when one factors in all the benefits one sees that the overall share of the economy returned to workers via compensation has been holding steady at about 70% for decades.Even as some, including the folks on 43rd Street*, bemoan rising corporate profitability that supposedly is made possible by squeezing wages, that profitability is more likely to be returned to ordinary Americans in the form of dividends and capital gains on the stock investments that are an increasingly common part of compensation packages.

So why are so many, and especially organized labor, in denial? Perhaps it’s because the good news for workers is bad news for unions. Even as the economy and incomes have been steadily improving for decades, union membership has been dropping off. By some estimates, a third of American workers were unionized in the years immediately after World War II. About 12.5% are today. Much of the decline has been spurred by the economy’s shift from manufacturing to services, a trend that, incidentally, provides many workers more opportunities to increase their productivity and thus their compensation.

Meantime, increasing participation in forms of compensation like 401(k)s and other investment-based retirement plans is blurring the lines between “labor” and “capital.” Those trends challenge unions that used to rely on a static population of workers who viewed themselves in conflict with management. The new economy is a boon for many workers, who now have an opportunity to increase their productivity by matching themselves to specialized jobs that would have been unfathomable even a generation ago. Workers also have more mobility to move to better, and better-paying, jobs.

Most significantly, more workers are joining the investing class, taking ownership of a share of the economy’s prosperity instead of waiting for a union boss to wrest a few extra pennies from management. This brave new world is unsettling — it offers less certainty than, say, a job at Bethlehem Steel used to. Then again, that steel job turns out not to have offered much security, either. Although America’s economic transition undoubtedly causes genuine pain to some households, the overall picture is an optimistic one. American workers have plenty of reasons to celebrate this weekend.

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* Are the employees of the New York Times Company “sharing” in the productivity gains of the publisher of the newspaper that complains of current trends? The Company’s most recent annual says:

“Our process mapping and productivity gains are expected to lead to annual savings related to our staff reduction programs.… We decreased the size of our workforce, beginning last summer, by approximately 200 positions. In September, we announced the elimination of another 500 positions, which will be substantially completed by the end of the first quarter of 2006. At the beginning of 2001,we had approximately 13,800 employees and we expect to be at about 11,400, down 17%, excluding acquisitions and divestitures, by year-end.

“These staff reductions are due, in part, to our productivity initiatives. Other factors include our ability to leverage the investments that we have made in technology and centralizing the back office services over the past few years. We are also reducing structural costs related to our benefi programs, such as our stock-based compensation, pension and healthcare expenses.”

At the Times, compensation as percentage of output (revenues) is flat. It also lags in comparison to the national share of compensation as a percent of output. Have trade unions helped? Not likely. While American business is less than one-tenth unionized, 47% of Times employees are. This fact failed to stop a 17% job reduction. New Yorkers await an editorial on the Times company’s own practices.