In Simple Words
Productivity-compensation decoupling is like a factory where output doubles, but worker pay stays flat. Economic gains flow predominantly to high-earning college-educated workers and capital owners, leaving non-college workers stuck in low-wage roles that do not share in broader economic expansion.
Observed US growth from 1979 to 2018
- Net productivity
- 69.6% growth
- Hourly compensation
- 11.6% growth
EPI’s observed 1979–2018 series show net productivity growth of 69.6% and hourly compensation growth of 11.6%. Compensation includes wages and benefits of private-sector production or non-supervisory workers. These are different economic series, not randomized groups or a causal estimate.
See source →Research question
Over recent decades, wage growth for non-supervisory workers in the United States has decoupled from macroeconomic productivity growth. Non-college educated workers face stagnant real wages and expanding educational income gaps despite rising national economic output.
Participants
U.S. national economy aggregate private sector non-supervisory labor force and Social Security Administration wage record data from 1948 to 2018.
Study Design
Observational trend analysis by the Economic Policy Institute (EPI) analyzing Bureau of Labor Statistics (BLS) productivity data and Kopczuk, Saez, and Song Social Security wage datasets.
Results
From 1979 to 2018, net productivity grew by 69.6% while worker hourly compensation grew by only 11.6%. Real earnings for the top 0.1% grew by 340.7% (fifteen times faster than the bottom 90%), while earnings for the bottom 90% grew by 32.9%.
Takeaway
Deploy sector-focused employment interventions to connect non-college workers to high-demand technical sectors that restore real wage growth.