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Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay

David_N

David_N

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This is a very important discussion, and I will lay out the most important points, well, that are important in my opinion.
Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real | Economic Policy Institute
Raising America’s Pay: Why It’s Our Central Economic Policy Challenge | Economic Policy Institute -
This study is recommended to read before examining the one above.

First, wages did not stagnate for the vast majority because growth in productivity (or income and wealth creation) collapsed. Yes, the policy shifts that led to rising inequality were also associated with a slowdown in productivity growth, but even with this slowdown, productivity still managed to rise substantially in recent decades. But essentially none of this productivity growth flowed into the paychecks of typical American workers.

Second, pay failed to track productivity primarily due to two key dynamics representing rising inequality: the rising inequality of compensation (more wage and salary income accumulating at the very top of the pay scale) and the shift in the share of overall national income going to owners of capital and away from the pay of employees.

Third, although boosting productivity growth is an important long-run goal, this will not lead to broad-based wage gains unless we pursue policies that reconnect productivity growth and the pay of the vast majority.
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For decades following the end of World War II, inflation-adjusted hourly compensation (including employer-provided benefits as well as wages) for the vast majority of American workers rose in line with increases in economy-wide productivity. Thus hourly pay became the primary mechanism that transmitted economy-wide productivity growth into broad-based increases in living standards.
Click to expand...

Since 1973, hourly compensation of the vast majority of American workers has not risen in line with economy-wide productivity. In fact, hourly compensation has almost stopped rising at all. Net productivity grew 72.2 percent between 1973 and 2014. Yet inflation-adjusted hourly compensation of the median worker rose just 8.7 percent, or 0.20 percent annually, over this same period, with essentially all of the growth occurring between 1995 and 2002. Another measure of the pay of the typical worker, real hourly compensation of production, nonsupervisory workers, who make up 80 percent of the workforce, also shows pay stagnation for most of the period since 1973, rising 9.2 percent between 1973 and 2014. Again, the lion’s share of this growth occurred between 1995 and 2002.
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Over the entire 1973–2014 period, rising inequality explains over two-thirds of the productivity–pay divergence.
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These trends indicate that while rising productivity in recent decades provided the potential for a substantial growth in the pay for the vast majority of workers, this potential was squandered due to rising inequality putting a wedge between potential and actual pay growth for these workers.
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The rest of the paper is very detailed and gives a great analysis of the problem. Trickle down voodoo does not work.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

The entirety of the gap between productivity and hourly pay growth is income accruing somewhere in the economy besides the paychecks of typical workers. Mostly, this “somewhere” has been in the pockets of extraordinarily highly paid managers and owners of capital. While the rise in transfer income (government programs such as unemployment insurance and Social Security and Medicare) has blunted some of the sting of the growing gap between pay and productivity, even this transfer income has grown much more slowly in the post-1979 period relative to before. Further, transfer incomes are a much smaller share of typical household incomes than are labor earnings, so it would have taken a huge increase in these transfers to fully compensate for the near stagnation of hourly pay. This has not happened.
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No surprise there.. :violin
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Of course the thread fails to deliver on what actually causes productivity to increase.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Excon said:
Of course the thread fails to deliver on what actually causes productivity to increase.
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Productivity has been increasing, workers wages have barely moved. The rich have been doing amazingly well though. What was your point?
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Excon said:
Of course the thread fails to deliver on what actually causes productivity to increase.
Click to expand...

Feel free to ignore the fact that workers haven't been seeing the benefits of the productivity.
"But essentially none of this productivity growth flowed into the paychecks of typical American workers."
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Excon said:
Of course the thread fails to deliver on what actually causes productivity to increase.
Click to expand...

Technology has been a huge driver of productivity increases, which favours capital over labour. Where 100 bank workers used to be there is now an ATM, and some associated technology. Capital can racket up productivity gains with a few people with moderate to high skills. Labour is squeezed between automation, and in lower skilled jobs, globalized workers, many of whom working for rock bottom wages, low even for their own economies.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Well to start with they don't define what "real productivity" is. Is real productivity combined total profit for all corporations? All small businesses? Is it satisfactory compensation, one's labor as investment? It's certainly not GDP because GDP is not dependent on labor.

I'll tell you one thing: the average worker of today is no where near as productive as the worker of the 70s and 80s. Companies simply are not as demanding. And workers are spoiled. Consequently most think workers have grown too demanding.

And those of the 70s and 80s were less productive than those of the 20s and 30s; if they were lucky they inherited that same work ethic.

So what is this? Part and parcel of the "manifesto"?

We have rising masses of uneducated unskilled workers, entering a work force, a labor market, of far too few skilled labor positions. We have a glut of menial labor in this country. There is no labor leverage, there's nothing to bargain with, they're lucky if they have jobs at all.

And there's only one way to beat the system and that's to beat the system.

It's either that or we are destined to repeat history; history has done this one before.
 
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Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

betuadollar said:
Well to start with they don't define what "real productivity" is. Is real productivity combined total profit for all corporations? All small businesses? Is it satisfactory compensation, one's labor as investment? It's certainly not GDP because GDP is not dependent on labor.

I'll tell you one thing: the average worker of today is no where near as productive as the worker of the 70s and 80s. Companies simply are not as demanding. And workers are spoiled. Consequently most think workers have grown too demanding.

So what is this? Part and parcel of the manifesto?
Click to expand...

Pretty odd when one's signature quotation makes more sense than their post.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Ganesh said:
Technology has been a huge driver of productivity increases, which favours capital over labour.
Click to expand...
And? It better favor the "capital" as that is what/who is paying for it.




David_N said:
Feel free to ignore the fact that workers haven't been seeing the benefits of the productivity.
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When productivity is a direct result of the employer and not because of harder working employees, it should be the employer who monetarily benefits.
 
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Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Ganesh said:
Pretty odd when one's signature quotation makes more sense than their post.
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Polemics... I view posts like these as mere polemics.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Excon said:
And? It better favor the "capital" as that is what/who is paying for it.




When productivity is a direct result of the employer and not because of harder working employees, it should be the employer who monetarily benefits.
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"When productivity is a direct result of the employer and not because of harder working employees, it should be the employer who monetarily benefits."
:lamo:lamo
You can't actually believe that. WORKERS DO THE DAMN WORK.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

David_N said:
"When productivity is a direct result of the employer and not because of harder working employees, it should be the employer who monetarily benefits."
:lamo:lamo
You can't actually believe that. WORKERS DO THE DAMN WORK.
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I see you are choosing to ignore that reality of why productivity has increased.
It isn't because workers are working harder.
It is because employers have made the work easier.


So again.
When productivity is a direct result of the employer and not because of harder working employees, it should be the employer who monetarily benefits.​
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

betuadollar said:
Well to start with they don't define what "real productivity" is. Is real productivity combined total profit for all corporations? All small businesses? Is it satisfactory compensation, one's labor as investment? It's certainly not GDP because GDP is not dependent on labor.

I'll tell you one thing: the average worker of today is no where near as productive as the worker of the 70s and 80s. Companies simply are not as demanding. And workers are spoiled. Consequently most think workers have grown too demanding.

And those of the 70s and 80s were less productive than those of the 20s and 30s; if they were lucky they inherited that same work ethic.

So what is this? Part and parcel of the "manifesto"?

We have rising masses of uneducated unskilled workers, entering a work force, a labor market, of far too few skilled labor positions. We have a glut of menial labor in this country. There is no labor leverage, there's nothing to bargain with, they're lucky if they have jobs at all.

And there's only one way to beat the system and that's to beat the system.

It's either that or we are destined to repeat history; history has done this one before.
Click to expand...
Are you losing it?

Workforce productivity has more than doubled since the '70's!


800px-US_productivity_and_real_wages.jpg


Source: Wikipedia - 'Workforce Productivity'
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Excon said:
I see you are choosing to ignore that reality of why productivity has increased.
It isn't because workers are working harder.
It is because employers have made the work easier.


So again.
When productivity is a direct result of the employer and not because of harder working employees, it should be the employer who monetarily benefits.​
Click to expand...

I'm not ignoring reality, you are spitting on the working class who have had stagnant wages, saw little to nothing from productivity.. Yes, technology makes work easier, this has nothing to do with workers barely seeing the benefits OF THEIR PRODUCTIVITY. It amazes me how people still think this way.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Chomsky said:
Are you losing it?

Workforce productivity has more than doubled since the '70's!


View attachment 67191306


Source: Wikipedia - 'Workforce Productivity'
Click to expand...

According to excon, the employers are the ones who've caused all of the productivity gains, because, somehow, the employers who have been reaping the benefits of workers productivity have invented all of the technology with their own bare hands.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

David_N said:
Feel free to ignore the fact that workers haven't been seeing the benefits of the productivity.
"But essentially none of this productivity growth flowed into the paychecks of typical American workers."
Click to expand...

How much of the productivity is attributable to the efforts of the workers, and how much is attributable to capital investment by the employer? If a company spends a million dollars on increased automation and improves their productivity by 20%, how much of an increase do you think the workers should see?
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

David_N said:
I'm not ignoring reality, you are spitting on the working class who have had stagnant wages, saw little to nothing from productivity.. Yes, technology makes work easier, this has nothing to do with workers barely seeing the benefits OF THEIR PRODUCTIVITY. It amazes me how people still think this way.
Click to expand...
iLOL
The increases of productivity are not caused by the worker. It is caused by the investment of the employer.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Moon said:
How much of the productivity is attributable to the efforts of the workers, and how much is attributable to capital investment by the employer? If a company spends a million dollars on increased automation and improves their productivity by 20%, how much of an increase do you think the workers should see?
Click to expand...
If a company spends a million dollars on increased automation
Click to expand...
Well, that just means workers have lost their jobs..
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Excon said:
iLOL
The increases of productivity are not caused by the worker. It is caused by the investment of the employer.
Click to expand...
The increases of productivity are not caused by the worker.
Click to expand...
This is worthy of going into my signature. However, many of your other posts are also worthy, so this is a tough one.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

David_N said:
Well, that just means workers have lost their jobs..
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Not sure what you're saying here. Automation = bad?
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Moon said:
Not sure what you're saying here. Automation = bad?
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Oh, automation isn't bad, if we have a safety net, and, as automation continues, I can see us adopting a UBI.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Excon said:
iLOL
The increases of productivity are not caused by the worker. It is caused by the investment of the employer.
Click to expand...

For decades following the end of World War II, inflation-adjusted hourly compensation (including employer-provided benefits as well as wages) for the vast majority of American workers rose in line with increases in economy-wide productivity. Thus hourly pay became the primary mechanism that transmitted economy-wide productivity growth into broad-based increases in living standards.
Click to expand...
Hmm.. I want to see how you justify what has been happening..
Keep worshiping trickle down voodoo.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Moon said:
Not sure what you're saying here. Automation = bad?
Click to expand...

And before we get into the argument of automation not causing any employment drops (Due to the past "automation) Keep in mind, the automation in the past required workers to operate the machines, it's much different today.
 
Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

Chomsky said:
Are you losing it?

Workforce productivity has more than doubled since the '70's!


View attachment 67191306


Source: Wikipedia - 'Workforce Productivity'
Click to expand...

This references industrial productivity. Only.

Just to give you an example, your local telephone repairman: In the 70s that guy took seven or eight calls a day; today he takes one, two at the most. And because the company he works for has been sliced and diced, perhaps multiple times, his union no longer possesses the leverage it once had. He is simply less valuable to the market. People in general simply do not produce like they used to. In fact if you surveyed the market and asked what the "protestant work ethic" is nine out of ten would have no idea what you're talking about. Combine that with the lack of leverage and labor is going to make proportionately less. Still he's fortunate because products today are very very cheap. So he works less, produces less, and enjoys far more.
 
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Re: Understanding the Historic Divergence Between Productivity and a Typical Worker’s

I don't think the responders are getting it:
For decades following the end of World War II, inflation-adjusted hourly compensation (including employer-provided benefits as well as wages) for the vast majority of American workers rose in line with increases in economy-wide productivity. Thus hourly pay became the primary mechanism that transmitted economy-wide productivity growth into broad-based increases in living standards.
Since 1973, hourly compensation of the vast majority of American workers has not risen in line with economy-wide productivity. In fact, hourly compensation has almost stopped rising at all. Net productivity grew 72.2 percent between 1973 and 2014. Yet inflation-adjusted hourly compensation of the median worker rose just 8.7 percent, or 0.20 percent annually, over this same period, with essentially all of the growth occurring between 1995 and 2002. Another measure of the pay of the typical worker, real hourly compensation of production, nonsupervisory workers, who make up 80 percent of the workforce, also shows pay stagnation for most of the period since 1973, rising 9.2 percent between 1973 and 2014. Again, the lion’s share of this growth occurred between 1995 and 2002.
Click to expand...
 
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