Posts Tagged ‘Wages Growth’

The U.S. inequality problem in one graph

February 28, 2019

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This is an updated version of an Economic Policy Institute chart I’ve posted before.  It shows that from 1948 through 1979, the hourly wages of American workers rose almost as fast as worker productivity.  From 1979 on, productivity continued to rise, although at a slower rate, but wages hardly increased at all.

If you include the increased debt, including student debt, that most families have taken on, the average wage-earner’s buying power may be even less than in 1979.

What happened?  The EPI cites three things:

  1. A greater share of national income to holders of financial assets and a smaller share to wages and salaries.
  2. A greater spread between wage-earners and highly paid managers and professionals.
  3. A greater increase in the prices of things wage-earners buy (consumer goods and services) than in the things they product (consumer goods, but also capital goods.

What is the answer?  The EPI says the U.S. needs stronger labor unions and enactment of pro-labor government policies, including a higher minimum wage, higher taxes on top incomes and a jobs program based on repairing the nation’s infrastructure.

LINKS

The Agenda to Raise America’s Pay by the Economic Policy Institute.

First Day Fairness: An agenda to build worker power and ensure job quality by Celine McNicholas, Samantha Sanders and Heidi Shierholz for the Economic Policy Institute.

Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real by Josh Bivens and Laurence Mishel for the Economic Policy Institute.

The Survival of the Richest by Nomi Prins for TomDispatch.

Germany on the same path as the USA

December 12, 2014
Wage and productivity growth in Germany

Wage and productivity growth in Germany

Via VoxEU

Some years back I wrote a post holding up Germany as a role model for the United States.  I said Germany’s policies showed that a nation can have a strong labor movement and a strong social safety net and yet have a growing economy and success in world markets.

I failed to recognize that Germany was and is following the same path as the United States—high profits, wage stagnation and financialization.  Germans are better off than Americans only because their starting point was higher when they started on the road to decline.

The chart shows that German productivity is increasing, just as in the United States, but German wage-earners aren’t getting the benefit of it.

Just like in the USA.

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Pay vs. productivity growth around the world

June 6, 2013
gap-productivity-compensation-countries

Double click to enlarge.

Carson_US-MFG_d1

Click to enlarge.

The gap between growth of workers’ productivity and workers’ wages exists in a number of countries, but the gap is much wider in the United States than in other advanced industrial countries.

I took the second chart from an on-line article by an analyst who thinks this is a good thing, not a bad thing.  This analyst thinks it means that U.S. manufacturing is becoming more competitive internationally.

The failure of wages to keep up with productivity could be a good thing if it meant that the profits of U.S. industry were being plowed back into modernizing factories and infrastructure, expanding industrial research and creating new industries.  Do you see any sign this is happening?  Or is this just income being redistributed upward?

Click on US Manufacturing Restores Competitive Vigor for the source of the second chart and an optimistic view by Joseph G. Carson on the AllianceBernstein Blog on Investing.

Click on Signs of Factory Revival Hard to Spot for a skeptical view in the Wall Street Journal.

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