American wages flat even as productivity climbs
Some economists say it is wrong to look at just wages because other aspects of employee compensation, notably health costs, have risen. But overall employee compensation — including health and retirement benefits — has also slipped badly, falling to its lowest share of national income in more than 50 years while corporate profits have climbed to their highest share over that time.
Conservative and liberal economists agree on many of the forces that have driven the wage share down. Corporate America’s push to outsource jobs — whether call-center jobs to India or factory jobs to China — has fattened corporate earnings, while holding down wages at home. New technologies have raised productivity and profits, while enabling companies to shed workers and slice payroll. Computers have replaced workers who tabulated numbers; robots have pushed aside many factory workers.
“Some people think it’s a law that when productivity goes up, everybody benefits,” says Erik Brynjolfsson, an economics professor at the Massachusetts Institute of Technology. “There is no economic law that says technological progress has to benefit everybody or even most people. It’s possible that productivity can go up and the economic pie gets bigger, but the majority of people don’t share in that gain.”
From 1973 to 2011, worker productivity grew 80 percent, while median hourly compensation, after inflation, grew by just one-eighth that amount, according to the Economic Policy Institute, a liberal research group. And since 2000, productivity has risen 23 percent while real hourly pay has essentially stagnated.
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It amazes me that people still don’t get it: robots don’t pay taxes. Robots don’t pay socialist security, FUTA, SUTA, nor do they take maternity leave, vacation, or get overtime for working 20+ hours a day. Of course a company is going to go with the robot over the worker if they can get away with it. And if they can’t? Then just ship the job overseas. Anything is better than dealing with the American labor market.
Browncoatone on January 13, 2013 at 4:09 PM
Ed Morrissey, for instance.
red_herring on January 13, 2013 at 4:10 PM
Clearly you’re not a liberal. Robots don’t pay taxes yet
theblackcommenter on January 13, 2013 at 4:13 PM
This underlying reality is in large measure why people are losing faith in capitalism and are starting to Europeanize their economic views.
The question is whether or not companies recognize that raising worker wages is in their own economic interest so as to avoid political action being taken against them.
Stoic Patriot on January 13, 2013 at 4:14 PM
Good paying jobs require skill, intelligence, competence, and productivity.
All those concepts are anathema to what the NEA teaches in education institutions.
tom daschle concerned on January 13, 2013 at 4:19 PM
Really? You got a quote?
Sadly you’re correct.
CW on January 13, 2013 at 4:19 PM
The companies I am familiar with have experienced the massive inflation of the cost of materials that the consumer has largely been cushioned from (so far). Add healthcare and what is now a for year cringe when it comes to new and shiny regulations and it all starts to make sense.
The solution should be obvious. Pass a windfall tax on every company that breaks even.
CorporatePiggy on January 13, 2013 at 4:19 PM
Four year cringe.
CorporatePiggy on January 13, 2013 at 4:20 PM
Another little socialist wishful thinking that the free market is “broken”. Productivity gains benefit the consumers that buy them and the producers that make them. Buggy whip makers have to find a new job, but, once they do, they also benefit.
This guy is just trying to blame the effects of the giant government cluster **** on real progress.
Count to 10 on January 13, 2013 at 4:21 PM
I may have missed it, but I didn’t see a single reference to which measure of labor productivity is increasing.
Output per hour, for example, is notoriously unreliable as a measure of actual labor productivity because it doesn’t control for the contributions of other factors. A real labor productivity measure involves modeling both labor inputs and capital service flows (very hard to measure) as well as outputs.
DrSteve on January 13, 2013 at 4:22 PM
This is exactly the kind of thinking that was prevalent during the Great Depression, and was instrumental in turning a sharp recession into damaging stagnation.
Count to 10 on January 13, 2013 at 4:24 PM
welcome to uncertainty
blatantblue on January 13, 2013 at 4:26 PM
AKA capricious Chicago rule and protection rackets.
tom daschle concerned on January 13, 2013 at 4:27 PM
If outsourcing is the cause, making outsourcing even more attractive is hardly the way to go.
theperfecteconomist on January 13, 2013 at 4:30 PM
But the evilll gays??? You didn’t vote for the guy who was going to fix the economy because of that.
Illinidiva on January 13, 2013 at 4:31 PM
You’re tellin’ me it didn’t trickle down? No way!
lester on January 13, 2013 at 4:33 PM
Good grief — the stupid, it hurts!
“Pushing down the jobless rate” is a result, not an action — and everything else in there drives the jobless rate up.
Count to 10 on January 13, 2013 at 4:34 PM
I didn’t vote for Romney because of the genocide of abortion, his implementation of gay marriage, his support of cap and trade, his gun control legislation, his paving of the way for Obamacare, and being an outright fraud and vulture capitalist who spit upon the 47 percent. May the b*stard burn in Hell.
Stoic Patriot on January 13, 2013 at 4:38 PM
Precisely how Obama loves it. He is kept by the rich/white Wall Streeters and financial types. They are getting richer, he too. The poor are getting to be more of, the middle class are getting poorer. It’s all in his plan.
Schadenfreude on January 13, 2013 at 4:39 PM
I’m betting lester has zero idea what a P&L looks like.
CorporatePiggy on January 13, 2013 at 4:40 PM
That’s your Obama economy at work simpleton.
CW on January 13, 2013 at 4:40 PM
Wow. Low info voter.
Count to 10 on January 13, 2013 at 4:47 PM
Au contraire. I’m just someone who listened to the man.
Stoic Patriot on January 13, 2013 at 4:51 PM
So increased taxing and regulating business, adding unnecessary costs, while demonizing profit in a high unemployment “new norm” has not led to increased wages? I am shocked I tell you.
Grunt on January 13, 2013 at 4:54 PM
You are frequently wrong. This would be just another case to add to a long list. The “I’m a conservative know-it-all” crap is really annoying.
lester on January 13, 2013 at 4:57 PM
And yet you have no concept of context or the fact that politicians have to say they “believe in” what their constituents want.
Count to 10 on January 13, 2013 at 4:59 PM
Please educate us all then.
It’s been a while since I heard a socialist come out and say exactly what they think our current economic situation looks like, why it is that way, and what if anything they would change.
The range is hot.
CorporatePiggy on January 13, 2013 at 5:02 PM
Economic Policy Institute makes Media Matters look like the John Birch Society.
truth2power on January 13, 2013 at 5:03 PM
Those quotes are in context. Would you like something more extended on abortion just to make sure? Let’s try this.
As for politicians having to say they “believe in” what their constituents want, you are implying then that what they say isn’t what they really believe. You’re essentially comfortable with politicians being blatantly dishonest about their positions then. That’s precisely why Romney was labeled a flip-flopper, and why people regard him as a fraud.
So to keep the focus on abortion for a moment, should I believe him in these videos? Should I believe him when he claimed to be pro-life? Should I believe him when he said he wouldn’t support any abortion-related legislation to the Des Moines Register? Should I believe him when he rescinded those remarks the following day?
And once you answer that, why should I trust that that’s his actual position?
Stoic Patriot on January 13, 2013 at 5:04 PM
I can’t believe that lester went the ‘trickle down’ route.
Lester, the defining economic policy of this Administration/Fed IS trickle down…you need to read more newspapers. Think: Bankstas…does that help?
r keller on January 13, 2013 at 5:09 PM
Because he has a history of doing in office what he said he would do on the campaign trail. This is a guy that looks at a campaign like a job interview, not a popularity contest to be king. The nation would have been much better off with him in charge, and you have only worked against your stated goals.
Count to 10 on January 13, 2013 at 5:09 PM
My goal is to get a pro-life candidate in office. That was not Romney. For that person to have a meaningful impact in office, they would need to appoint pro-life judges. The person to make such appointments was not Romney.
Now that Obama has been reelected, in 4 years we have another shot to get it right. Had Romney won, and if we assume that past performance is the best indicator of future performance, we can expect that he’d appoint pro-choice judges, and that our only alternative after 4 years of a Romney administration would be a pro-choice Democrat.
Given those alternatives, I’m much happier looking forward to 2016 now than I would have been.
Stoic Patriot on January 13, 2013 at 5:15 PM
You reprobate know nothing do-gooder fools are pretty annoying too. In fact you would be hilarious to ridicule if the destruction and death of your imbecilic policies were not reality.
So go suck eggs.
tom daschle concerned on January 13, 2013 at 5:19 PM
The New York ‘Tards are talking about wages as a share of GDP. But those three letters don’t mean the same thing they used to. Most of what they’re calling “growth” these days means a shrinking free market, and exponentially rising government spending.
logis on January 13, 2013 at 5:23 PM
Coming from you of all people that is truly rich with irony.
CW on January 13, 2013 at 5:28 PM
That’s odd. It’s almost as if employers have lately been required to spend money on some kind of useless nonsense that might have otherwise been spent on paying their employees more generously or avoiding layoffs.
Mr. Prodigy on January 13, 2013 at 5:32 PM
My employer decided to kick-off 2013 by disallowing anytime accrued PTO from rolling over into a new calendar year. \m/ kick ass \m/
( and, of course, nobody got so much as a cost-of-living adjustment )
(( still I’d wager that executive management got whatever bonuses they’re “contractually obligated” to ))
Jeddite on January 13, 2013 at 5:39 PM
Which is a point I made some time ago. It took both parties pursuing their own individual ideology to screw up the economy this badly. The Democrats, as you just noted, made the environment hostile to industry, and the GOP ensured that the door always remained open to outsourcing. The Democrats, however, could always put on a good show that they supported the American worker, even thought they never fought all that hard against outsourcing, but the GOP got rightly tagged as enabling outsourcing. That may be why Republicans are having such a difficult time in the formerly industrial NE.
DFCtomm on January 13, 2013 at 5:46 PM
It’s amazing that not only is immigration not mentioned in this article but it’s not mentioned in the comments either…
you guys are slacking.
ninjapirate on January 13, 2013 at 5:47 PM
Which is not a measure of labor productivity at all.
My point was, people typically look at wage growth versus growth in some (poorly constructed) measure like output per hour. But changes in output per hour ascribe all productivity growth to the factor in the denominator (labor). Let’s say the actual productivity growth is due to higher marginal productivity of equipment… a look at output per hour still has you dividing a higher total output by the quantity of labor inputs. It makes it look like labor’s more productive when labor had nothing to do with it.
In order to avoid this obvious stumbling-block to the narrative they’re building here, they hide the ball and don’t even tell you which metric they’re talking about.
DrSteve on January 13, 2013 at 6:00 PM
Perhaps overburdening regulations and tax increases do have a negative effect. Imagine that. Last year alone I had costs I had never had to deal with before with osha, the department of labor, and the epa. Now Obamacare and the Obama tax increases are about to add even more costs. Some of these costs get passed onto the consumer but I can’t pass them all along so guess who gets the short wnd of the stick? Obama hates working people.
Ellis on January 13, 2013 at 6:42 PM
Too bad the growth of government didn’t flatline too.
I wonder if they’re related.
p0s3r on January 13, 2013 at 7:10 PM