Reply to thread

Message: <blockquote data-quote="rickyb" data-source="post: 5208120" data-attributes="member: 56035"><h3>What broke the link between pay and productivity?</h3>Starting in the late 1970s, policymakers began dismantling all the policy bulwarks helping to ensure that typical workers’ wages grew with productivity. <a href="https://www.epi.org/publication/the-importance-of-locking-in-full-employment-for-the-long-haul/" target="_blank">Excess unemployment was tolerated</a> to keep any chance of inflation in check. Raises in the federal minimum wage became <a href="https://economics.mit.edu/files/3279" target="_blank">smaller and rarer</a>. <a href="https://www.epi.org/publication/unlawful-employer-opposition-to-union-election-campaigns/" target="_blank">Labor law failed to keep pace</a> with growing employer hostility toward unions. <a href="https://www.budget.senate.gov/imo/media/doc/Gabriel%20Zucman%20-%20Testimony%20-%20US%20Senate%20Budget%20Committee%20Hearing.pdf" target="_blank">Tax rates on top incomes</a> were lowered. And anti-worker deregulatory pushes—from the <a href="https://www.aeaweb.org/articles?id=10.1257/jep.12.3.111" target="_blank">deregulation of the trucking and airline industries</a> to the retreat of <a href="https://www.hup.harvard.edu/catalog.php?isbn=9780674237544" target="_blank">anti-trust policy</a> to the <a href="https://cepr.net/report/a-short-history-of-financial-deregulation-in-the-united-states/" target="_blank">dismantling</a> of financial regulations and more—succeeded again and again.  In essence, policy choices made to suppress wage growth prevented potential pay growth fueled by rising productivity from translating into actual pay growth for most workers. The result of this policy shift was the sharp divergence between productivity and typical workers’ pay shown in the graph. From 1979 to 2020, net productivity rose 61.8%, while the hourly pay of typical workers grew far slower—increasing only 17.5% over four decades (after adjusting for inflation).  A closer look at the trend lines reveals another important piece of information. After 1979, productivity grew at a significantly slower pace relative to previous decades. But because pay growth for typical workers decelerated even more markedly, a large wedge between productivity and pay emerged. The growing gap amid slowing productivity growth tells us that the same set of policies that suppressed pay growth for the vast majority of workers over the last 40 years were also associated with a slowdown in overall economic growth. In short, economic growth became both slower and more radically unequal.<h3>If the fruits of economic growth are not going to workers, where are they going? </h3>The growing wedge between productivity and typical workers’ pay is income going everywhere but the paychecks of the bottom 80% of workers. If it didn’t end up in paychecks of typical workers, where did all the income growth implied by the rising productivity line go? Two places, basically. It went into the salaries of highly paid corporate and professional employees. And it went into higher profits (i.e., toward returns to shareholders and other wealth owners). This concentration of wage income at the top (growing wage inequality) and the shift of income from labor overall and toward capital owners (the loss in labor’s share of income) are two of the key drivers of economic inequality overall since the late 1970s. [URL unfurl="true"]https://www.epi.org/productivity-pay-gap/[/URL]drainageeeee</blockquote>

Verification