Saturday, November 9, 2019

Economic Policy Institute - Productivity–Pay Gap

Conservatives are up in arms in the UK at the moment saying we can't afford the Labour Party’s plan to reduce the hourly week, even though from 1979 to 2018 net productivity rose by 69.6%.


Most Americans believe that a rising tide should lift all boats—that as the economy expands, everybody should reap the rewards. And for two-and-a-half decades beginning in the late 1940s, this was how our economy worked. Over this period, the pay (wages and benefits) of typical workers rose in tandem with productivity (how much workers produce per hour). In other words, as the economy became more efficient and expanded, everyday Americans benefited correspondingly through better pay. But in the 1970s, this started to change.


Since 1979, pay and productivity have diverged.

From 1979 to 2018, net productivity rose 69.6 percent, while the hourly pay of typical workers essentially stagnated—increasing only 11.6 percent over 39 years (after adjusting for inflation). This means that although Americans are working more productively than ever, the fruits of their labors have primarily accrued to those at the top and to corporate profits, especially in recent years.

Economic Policy Institute - Productivity–Pay Gap

2 comments:

Peter Pan said...

Can't afford to pay workers, can't afford healthy ecosystems, can't afford his, can't afford that. Can't got 'mo money. Oh wait, can afford new toys for the military.

snowball1205 said...

This is incorrect. Methodology matters. When the private-sector growth of productivity and total compensation are compared using all private sector workers and the same output price deflator, it is apparent that compensation and productivity have grown pretty much hand-in-hand. As a result, the assertion that regular workers do not benefit from economic growth is based on a faulty analysis that essentially underestimates the growth in real hourly compensation during the last half century.