Overworked and Underpaid? Productivity Increases, But Wage Growth Declines

[babylonsister]

Published on Wednesday, September 1, 2010 by In These Times
Overworked and Underpaid? Productivity Increases, But Wage Growth Declines

by Akito Yoshikane


As Labor Day approaches, many Americans are breathing a sigh of relief for the extra day off. On a day that celebrates unions and the eight-hour work day, many workers are feeling like their hard work isn’t exactly paying off the way it used to.

Even as productivity has continued to climb, wages have been either stagnant or declining. Household income for the average working family has continued to fall, but men, latinos and those without a college education have experienced an especially sharp deceleration of wage growth since the recession, according to a new briefing paper by the Economic Policy Institute.

The Washington, D.C.-based think tank says that from 2002 to 2007, productivity rose 11 percent but the hourly wage for high school and college educated workers fell. In fact, the average median household income (adjusted for inflation) actually earned $2,000 less during that period, going from $60,804 to $58,718. For the first time, family income levels sunk below what they had been at the beginning of the economic cycle.

Typically, an era of higher productivity would also cause wages to rise as workers receive compensation for harder work. Instead, the opposite has been happening. As many companies have reduced staff to cut costs, employees have been squeezed to work longer and produce more. And with productivity falling slightly for the first time in more than a year, many workers have likely reached their threshold this past Spring.

That's because the labor isn't transferring to the employee paychecks. Nominal wage growth in the private sector was 3.4 percent before the economic crisis, but fell to 1.6 percent by the recession’s third year. Similarly, wage compensation dropped from 3.1 percent to 1.8 and most of the benefits went to the upper class. From 1989 to 2007, the top one percent of households earned 56 percent of the total income growth. The bottom 90 percent received a total of 16 percent.

more...

http://www.commondreams.org/headline/2010/09/01-7

[rfranklin]

1. Yep, the "free market" and God reward the deserving....

It just ain't any of us!

[RandomThoughts]

2. Some think money is god.

[54anickel]

3. More with less, more for less...been going on for years. n/t

[earthside]

4. Ah, Ha! The real reason ...

... why the Dow went up 250 points today.

[EFerrari]

5. It's been that way since the mid 70s. n/t

[gratuitous]

6. Been going on for 30 years

Worker productivity has steadily gone up, but wages haven't even kept pace with inflation. There's a lot of wealth being generated by all that increased productivity, but it isn't being paid to workers. Where do you suppose it might be going? Hmmmm. :think:

[DBoon]

8. much of it has vanished into a desert in Iraq

[TheMuse]

7. Nothing new. This has been the plan since Reagan

Squeeze more out of less. Drive wages down. Corporate profits up.

But if you listen to the right wing nutjobs, of course companies are going to reinvest that into more factories, jobs, etc. But with executive pay directly linked to share price, EPS, etc, they are instead incentivized to horde the profits and give as dividends to shareholders.

Money flows upwards. So we work harder to make the rich richer. Sooner or later the American populace will no longer have the stomach for being taking advantage of over and over and over again. Hopefully it is soon, because if we let the Repugs back in, this process is only going to be accelerated further.

But at the same time, we can't ease the pressure on Democrats either. We need to hold them accountable and elect progressive D's. Not just any D will do.

[DBoon]

9. We will become a low wage country

India will outsource its high tech work to us.

We will be trying to cross the border *into* Mexico to find work. Mexico will not appreciate it.

Europeans will vacation here because it is cheap, and because the natives are charming despite being poor and uneducated