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For more than three decades, the wages of American workers have been close to flat while economic insecurity has risen massively. Although the productivity of the U.S. economy has doubled in a generation, most of those gains have not been captured by workers. And in the decade that began in 2001, inflation-adjusted wages have fallen for all but the most affluent 3 percent of the population.

This pattern of deepening inequality was well entrenched before the financial collapse -- which only made things worse. In 2006, economists at Goldman Sachs, sounding almost Marxian, reported that "the most important contributor to higher profit margins over the past five years has been a decline in labor's share of national income." By 2006, wages as a percentage of gross domestic product...