Workers' pay lags behind productivity
Despite a lengthy period of economic expansion, the current US economy has a chance to become the first period of sustained growth since World War II in which real wages for workers also failed to increase, The New York Times reported in today's editions.
The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. In contrast, economists report that productivity -- the amount that an average worker produces in an hour -- has risen steadily during the same period.
As a result, wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960s, The Times said.
Though wages have been stagnating for some time, the rising value of benefits such as health insurance caused overall compensation for US workers to continue to rise, according to The Times.
In a speech on Friday to the Kansas City Federal Reserve Bank's annual retreat in Jackson Hole, Wyo., Federal Reserve chairman Ben S. Bernanke, though not specifically addressing the issue of wages warned that the unequal distribution of the economy's spoils could derail the trade liberalization of recent decades. Recent economic changes ``threaten the livelihoods of some workers and the profits of some firms," Bernanke said, adding that policy makers must ``ensure that the benefits of global economic integration are sufficiently widely shared."
According to The Times, the economy continues to add jobs, but global trade, immigration, layoffs, and technology appear to have eroded workers' bargaining power. Trade unions are weaker, while the buying power of the minimum wage is at a 50-year low. And healthcare is far more expensive than it was a decade ago, causing companies to spend more on benefits at the expense of wages, The Times said, adding that these forces have caused a growing share of the economy to go to companies instead of workers' paychecks.
