Must-Read: Josh Bivens and Lawrence Mishel: The Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real

Must-Read: Josh Bivens and Lawrence Mishel: The Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real: ”Our work has been widely cited…

…It has also attracted criticisms from those looking to deny the facts of inequality…. The data series and methods we use to construct our graph of the growing gap between productivity and typical worker pay best capture how income generated in an average hour of work in the U.S. economy has not trickled down to raise hourly pay for typical workers…. There are three important “wedges”… an overall shift in how much of the income in the economy is received by workers… the growing inequality [within] compensation… faster price growth of things workers buy relative to the price of what they produce….

Over the entire 1973 to 2014 period, over half (58.9 percent) of the growth of the productivity–median compensation gap was due to increased compensation inequality and about a tenth (11.5 percent) was due to a loss in labor’s income share. Less than a third (29.6 percent) of the gap was driven by price differences…. Gains to owners of capital and the improved bargaining position of capital owners are not adequately captured by this analysis of the wedges between productivity and median compensation… a wedge between pay and productivity caused by the improved bargaining position of capital owners… would likely be larger than the wedge made up of the loss of labor’s share of income in net domestic product…