The gap between U.S. productivity and the hourly wage paid to nonsupervisory employees continues to widen.
If anything, the gap is accelerating as the American economy continues to be transformed by the global supply chain and technological advances.
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One result has been the erosion of workers’ pay. During the postwar era of industrialization until 1979, wages in nonsupervisory occupations grew at roughly the same rate as productivity. That is, wage growth was directly associated with the growth of output.
Since 1979, however, that relationship has broken down. Nonsupervisory wage growth flattened out through 1995 and has grown only modestly since then, all while productivity has advanced.
Workers have taken notice: They are producing more, but they aren’t seeing the benefits. Class resentment has followed.
Today, the result is the K-shaped economy, where those with higher incomes are benefiting from the rise in productivity, while those with lower incomes, in the bottom of the K, are not.
The United States is not the only economy going through this transition. East Germany is a hotbed of discontent as manufacturing has been usurped by cheaper labor and higher productivity in China.
In the U.K., discontent is quite serious in the midlands and in the northern area of the country.
As the U.S. enters a period where millions are facing sharply higher medical insurance premiums and as artificial intelligence is stirring anxiety among workers over the potential loss of millions of jobs, the discontent is likely to grow.
