So where are all of the gains in productivity going? Two places:
First, owners of capital are getting a bigger share of GDP than before. In other words, the share of profits has risen faster than wages. Second, the highest paid workers are getting a bigger share of the wages that go to labor.
The net result is that families at the higher end of the income distribution have received more of the income produced by the economy since the 1980s. The latter fact has been documented meticulously by the brilliant research of Thomas Piketty and Emmanuel Saez.
The widening gap between productivity and median income is a defining issue of our time. It is not just about inequality – important as that issue is. The widening gap between productivity and median income has serious implications for macroeconomic stability and financial crises. Our forthcoming book takes up these issues in more detail.
There are two problems with these claims. First, the CBO’s calculations undervalue the best research on the minimum wage. Second, even in the CBO’s estimated world, low wage workers are much better off as a whole than under the current $7.25/hr. minimum wage.
TThe figure below shows that low-wage workers have far more education now than they did back in 1968. In 1968, 48 percent of low-wage workers had a high school degree, compared to 79 percent in 2012. Correspondingly, many more low-wage workers have attended at least some college or have a college degree, which the graph identifies as ‘college experience.’ While only 16.8 percent of low-wage workers in 1968 had gone to some college or had a college degree, that group had grown to nearly half (45.7 percent) by 2012. The bottom line is that minimum wage in 2013 is far less now than it was in 1968 despite the economy’s productivity more than doubling, and low-wage workers attaining far more education.
Texas Democrats fight back against Rick Perry’s Obamacare sabotage.
Volkswagen exec: We will accept what workers decide on Chattanooga plant union.
Los Angeles considering $15 minimum wage for hotel workers.
It’s almost like Los Angeles and New York City are competing for most populist city.
Chairman of Ohio Public Utilities Commission won’t run for reelection after ALEC connections are revealed.
House sponsor of “right to work” in Missouri admits law would lower wages.
Rep. Keith Ellison takes on wage theft in federal buildings.
Key Quote: “If a federal contractor thinks that they can steal the pay of workers, it’s very hard to believe that they would voluntarily pay those workers more money.”