Productivity Versus Compensation

Work harder. Make more money. Be a success. That’s the conventional logic. It was wise – until about 1974. Since then compensation hasn’t grown as fast as productivity. Specifically, worker compensation hasn’t grown. Wealth and income inequality has grown because corporate profits have risen with productivity. The profits, however, are directed to upper management and as dividends to shareholders. Globalization means corporations have been able to grow, which is good for profits. The growth in jobs was also globalized. So, even as workers became more productive, there was an increased supply of people who were happy to work for much less relative to Americans but much more than they were accustomed to. Profits go up. Wages stay flat. Global employment increases. American middle class stagnates, bifurcates, and dissipates.

“Why The Gap Between Worker Pay And Productivity Is So Problematic” – The Atlantic