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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsEPI: The wedges between productivity and median compensation growth
The wedges between productivity and median compensation growth
By Lawrence Mishel
Income inequality has grown over the last 30 years or more driven by three dynamics: rising inequality of labor income (wages and compensation), rising inequality of capital income, and an increasing share of income going to capital income rather than labor income. As a consequence, examining market-based incomes one finds that the top 1 percent of households have secured a very large share of all of the gains in income59.9 percent of the gains from 19792007, while the top 0.1 percent seized an even more disproportionate share: 36 percent. In comparison, only 8.6 percent of income gains have gone to the bottom 90 percent (Mishel and Bivens 2011).
A key to understanding this growth of income inequalityand the disappointing increases in workers wages and compensation and middle-class incomesis understanding the divergence of pay and productivity. Productivity growth has risen substantially over the last few decades but the hourly compensation of the typical worker has seen much more modest growth, especially in the last 10 years or so. The gap between productivity and the compensation growth for the typical worker has been larger in the lost decade since the early 2000s than at any point in the post-World War II period. In contrast, productivity and the compensation of the typical worker grew in tandem over the early postwar period until the 1970s.
Productivity growth, which is the growth of the output of goods and services per hour worked, provides the basis for the growth of living standards. However, the experience of the vast majority of workers in recent decades has been that productivity growth actually provides only the potential for rising living standards: Recent history, especially since 2000, has shown that wages and compensation for the typical worker and income growth for the typical family have lagged tremendously behind the nations fast productivity growth. This paper uses data from EPIs upcoming The State of Working America, 12th Edition (Mishel, Bivens, Gould, and Shierholz 2012) to document and explain these trends, particularly those of recent years.
<...>
Assessing the factors behind the productivity-median compensation gap
Table 1 depicts the basic trends and identifies the contribution of each factor in driving the productivity-median compensation gap in particular sub-periods and overall from 1973 to 2011. The particular sub-periods chosen are business cycle peaksyears of low unemployment with some exceptions. The two business cycles, 197989 and 19892000, are divided into the periods 197995 and 19952000 to separate the period of low productivity growth from the period starting in 1995 when productivity growth accelerated (and unemployment fell to low levels). The last period, 200011, extends from the end of the 1990s recovery to the most recent year of data.
- more -
http://www.epi.org/publication/ib330-productivity-vs-compensation/
By Lawrence Mishel
Income inequality has grown over the last 30 years or more driven by three dynamics: rising inequality of labor income (wages and compensation), rising inequality of capital income, and an increasing share of income going to capital income rather than labor income. As a consequence, examining market-based incomes one finds that the top 1 percent of households have secured a very large share of all of the gains in income59.9 percent of the gains from 19792007, while the top 0.1 percent seized an even more disproportionate share: 36 percent. In comparison, only 8.6 percent of income gains have gone to the bottom 90 percent (Mishel and Bivens 2011).
A key to understanding this growth of income inequalityand the disappointing increases in workers wages and compensation and middle-class incomesis understanding the divergence of pay and productivity. Productivity growth has risen substantially over the last few decades but the hourly compensation of the typical worker has seen much more modest growth, especially in the last 10 years or so. The gap between productivity and the compensation growth for the typical worker has been larger in the lost decade since the early 2000s than at any point in the post-World War II period. In contrast, productivity and the compensation of the typical worker grew in tandem over the early postwar period until the 1970s.
Productivity growth, which is the growth of the output of goods and services per hour worked, provides the basis for the growth of living standards. However, the experience of the vast majority of workers in recent decades has been that productivity growth actually provides only the potential for rising living standards: Recent history, especially since 2000, has shown that wages and compensation for the typical worker and income growth for the typical family have lagged tremendously behind the nations fast productivity growth. This paper uses data from EPIs upcoming The State of Working America, 12th Edition (Mishel, Bivens, Gould, and Shierholz 2012) to document and explain these trends, particularly those of recent years.
<...>
Assessing the factors behind the productivity-median compensation gap
Table 1 depicts the basic trends and identifies the contribution of each factor in driving the productivity-median compensation gap in particular sub-periods and overall from 1973 to 2011. The particular sub-periods chosen are business cycle peaksyears of low unemployment with some exceptions. The two business cycles, 197989 and 19892000, are divided into the periods 197995 and 19952000 to separate the period of low productivity growth from the period starting in 1995 when productivity growth accelerated (and unemployment fell to low levels). The last period, 200011, extends from the end of the 1990s recovery to the most recent year of data.
- more -
http://www.epi.org/publication/ib330-productivity-vs-compensation/
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EPI: The wedges between productivity and median compensation growth (Original Post)
ProSense
May 2012
OP
ProSense
(116,464 posts)1. Kick! n/t
kentuck
(111,069 posts)2. Since we can now get more production from fewer workers...
Should the rewards of more production go to the fewer workers or mostly to the top management?
We hear the argument that we should not reward machines or technology for higher production but if companies could produce everything without any labor, they would do so. So fewer employees is used as an excuse not to reward the higher production. I don't understand that thinking??
ProSense
(116,464 posts)3. Given that
"Since we can now get more production from fewer workers...Should the rewards of more production go to the fewer workers or mostly to the top management? "
...this applies to the top as well, it's not an excuse for the disparity. I mean, there have been job descriptions made up to keep people at the top who don't do jack shit.