Macroeconomic Productivity-Compensation Decoupling
Observational StudyReview
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.
Picture this
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.
What the evidence says
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%.
- Who was studied
- U.S. national economy aggregate private sector non-supervisory labor force and Social Security Administration wage record data from 1948 to 2018.
- How
- 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.
What to do
Deploy sector-focused employment interventions to connect non-college workers to high-demand technical sectors that restore real wage growth.
From the source
"From 1979 to 2018, the top 0.1 percent has seen its earnings grow fifteen times faster than the bottom ninety percent, which has only seen consistent wage growth in ten of the past forty years."
Evidence-Review_Sectoral-Employment_2222022_0.pdf