Canadians are more productive than ever. Workers have worked harder, worked longer, worked faster, worked leaner but those productivity gains are not being shared.
Median real hourly earnings grew by 0.09 per cent a year between 1976 and 2014, while labour productivity grew by 1.12 per cent a year. A study found the gap in earnings and productivity was because of three key factors: rising inequality (more share going to the top), the rising costs of consumer goods and a decline in workers’ share of the national income while the corporate or capital share is getting bigger and bigger.
Corporations are keeping a bigger share of the total economic pie rather than paying it out in wages. Between 1976 and 2014, the Canadian Centre for Study of Living Standards study found that labour’s share of total income dropped from 59.9 per cent to 53.3 per cent. This decline was accompanied by a corresponding increase in capital’s share of income.
The authors, economists James Uguccioni, Andrew Sharpe and Alexander Murray, note that “economic history and economic theory suggest that labour productivity growth should generate rising living standards for workers over time, so the gap between annual labour productivity growth and annual median wage growth is puzzling.” The authors conclude: “the most plausible explanations for both the ‘hollowing out of the middle’ of the earnings distribution and the decline of labour’s share of income are globalization, technological change and institutional change.”
By institutional change, they mean declining unionization. More and more economic research has been noting that the inability of workers to join unions, often because of regressive labour laws, is impacting not just how the economic pie gets shared, but economic growth and rising inequality.
A U.S. study by the Economic Policy Institute found that declining unionization resulted in lower wages for non-union workers. This isn’t a surprise, as unions often lift the floor for everyone.
The Organisation for Economic Co-operation and Development and the International Monetary Fund have both released reports as of late confirming that unions are important to shared prosperity and to reversing the growth in inequality.
Fight Capitalism. Contact:
The Socialist Party of Canada
PO Box 31024