Wages decline, productivity soars

Sep 3, 2015
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Wages decline, productivity soars

Sep 3, 2015
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Two recent reports highlight increasing wage inequality — In one report, the National Employment Law project says inflation and wage stagnation have been silently eroding real wages, by about 4 percent overall. 

Irene Tung, senior policy researcher a NELP, says the effect has been especially pronounced at the bottom range of income earners.

“The bottom fifth has seen wage declines of 5.7 percent,” she says, adding that the bottom end of low wage workers have been spared such steep wage declines due to minimum wage increases in certain areas.

Overall, people “may know they’re not getting raises, but they may not realize that effectively they have a thousand dollars less in their pocket than they did five years ago,” says Tung.

Lawrence Mishel, director of the Economic Policy Institute, adds that this echoes a longer term relationship between wages and productivity

“These two used to go together in the 1950’s, 60’s, and 70’s,” says Mishel. “They have diverged such that productivity grew 72 percent since 1973 but the pay of a typical worker grew only 9 percent.”

He adds that the current real minimum wage is 25 percent lower than it was in 1968. 

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