Unions were more powerful before 1980 and perhaps LABOR was the one with monopolistic rents. Therefore the divergence was a return to market value of labor, with correspondingly lower unemployment rates.Followed by the observation;
I remember a study which said higher returns to capital seemed concentrated in formerly unionized industries. The study pointed out other industries without unions, like retail banking or health care, haven’t seen the capital/labor income mix change.Those above market wages extorted by union thuggishness--the recent West Coast dockworkers slowdown, for example--back in the Golden Age Krugman is nostalgic for, were part and parcel of exploitation of non-unionized workers. Particularly non-white workers and women.
Put that in your pipe, and smoke it, Paul Krugman.