"And may I suggest that employers, although they’ll never say so in public, like this situation? That is, there’s a significant upside to them from the still-weak economy."

If the economy ever turns around (and I'm hopeful that it will), this will come back to bite the employers. A large percentage of employees are dissatisfied with their current jobs are are only staying there because of the difficult job market.[1] When the job market improves, companies will have a hard time filling all the positions of the abused employees who'll suddenly start leaving in droves. (Or they'll have to offer significant raises to bribe them to stay.)

Also, isn't Krugman pretty much stating the obvious in this article (employees have low bargaining power in a poor economy)?

[1] http://www.nbcnews.com/id/17348695/ns/business-careers/t/ame...