Stolen Wages

It’s hardly any wonder that Americans are rethinking work whenever they can and trying to not return to their crappy jobs. They are tremendously productive, making enormous profits for their bosses. And they get mere crumbs. Seriously, any fair system would be paying workers far more given their incredible productivity:

A loss of $10/hour in the typical worker’s compensation is the result of employers’ successful efforts to keep wage growth down over the past 40 years, according to a new paper by EPI distinguished fellow Larry Mishel and EPI director of research Josh Bivens. Their study, which is the first to aggregate and analyze all of the research to date, explains why workers’ pay has lagged far behind the growth in productivity over the period from 1979 to 2017.

When policy was oriented more strongly to sharing productivity growth more widely across income classes in the 30 years following World War II, typical workers’ wages kept pace with productivity growth. When this orientation changed, wage growth for nearly all workers faltered. This highlights clearly that policy matters for the pace of wage growth for the vast majority. Mishel and Bivens also show that a “rigging of the system” that empowered employers over workers was due to policy changes and changes in business practices that systematically undercut workers’ ability to get higher pay, job security, and better-quality jobs—which generated wage suppression and wage inequality.

In doing all of the above, the paper refutes claims that the attack on policies and institutions bolstering wage growth resulted in a more efficient or competitive economy, or that the deceleration of wage growth was just the unfortunate result of apolitical market forces that one neither can nor would want to alter such as technological change and automation.

The research provides empirical assessments of specific factors, the best-measured of which explain 55% of the productivity-wage divergence: excessive unemployment, eroded collective bargaining, and corporate-driven globalization. The paper also identifies half a dozen additional factors, including misclassification, noncompetes, and supply chain dominance, which account for another 20%. This shows that policy choices drove the vast majority of the divergence between productivity and pay for the typical worker.

Policy choices, indeed. Presidents from Carter to Trump and every one in between (not to mention their advisors and state-level figures) fundamentally bought into neoliberal ideas of the economy that effectively took corporate propaganda about employment and work and profit and money and turned it into federal policy. Whether a stagnant minimum wage or a lack of union laws or the weak and increasingly nonexistent regulatory state, the concentration of wages at the top of the pyramid has been quite intentional.