Productivity and wages
Another article from Jared Bernstein Washington Post:
There’s an interesting sort of argument going on between Stansbury/Summers (SS) and Mishel/Bivens (MB). My name has been invoked as well, so I’ll weigh in. It’s a “sort-of” argument because there’s less disagreement than first appears.
It all revolves around this chart, which plots to the real compensation of mid-wage workers against the growth in productivity. For years they grew together, then they grow apart. The levels of both variables almost double, 1948-73, but since then, productivity has outpaced the real comp of blue-collar, non-managerial workers (mid-wage workers) by a factor of 6.
Figure 1
That wedge between productivity and middle-class wage growth has become one of the more important developments in political economy, representing the rise of inequality and the disconnect of paychecks and growth. It’s even on a tee-shirt, produced by the group, Fed-Up…
I would take this analysis at least one more step and point ou that low compensation or cheap labor –either domestically of abroad — reduces the incentive for firms to invest. Traditionally, a major reason for investment is to increase productivity to offset higher cost labor.
So we have a self-reinforcing cycle of low wages leading to low productivity leading to low wages.
So much for the libertarian and or republican belief that low wages are the solution to every problem.
Dan , this chart and others very closely linked to it have been around for a decade at least and widely published in almost every media in the U.S.
I see nothing in the article that sheds any more light on it that hasn’t already been shed and argued back and forth.
So I’m wondering what your point in posting it is… it’s not like it isn’t a well known chart and I’d assume most RB readers have seen it and several versions of it over the last decade.
Why did you find this version of the chart you’ve seen a dozen or more times already interesting enough to post it?
Dan.. I forgot to add the punchline: Do you have an opinion or about the data the chart shows and/or implies? or is it just random news?
This is a lot like “Yep, did you notice the sun rose in the east yesterday again as it has for the past several million years on earth.”