Tuesday, October 04, 2016

Work harder for less

In Economic Synopses, produced by the St. Louis Federal Reserve, the two authors, B. Ravikumar and Lin Shao, found that labor productivity for U.S. workers has increased six percent since 2009, while wages have declined 0.5 percent. (The authors measure labor productivity as real total output divided by total hours worked and labor compensation as real total labor compensation divided by total hours worked.)

Looking back to the previous officially designated recession in the U.S., declared to have ended in 2001, the authors found that over the following five years productivity increased about 13 percent, while wages increased by about five percent.

Overall, the authors summarize by demonstrating that wages have lagged productivity by a wide margin since 1950, with the gap beginning to widen in the 1970s. Productivity in 2016 is 3.8 times higher than it was in 1950, while wages are only 2.7 times greater.