The Productivity-Median Compensation Gap in the United States: The Contribution of Increased Wage Inequality and the Role of Policy Choices

Lawrence Mishel () and Josh Bivens ()

International Productivity Monitor, 2021, vol. 41, 61-97

Abstract: This article offers a narrative and supporting evidence on mechanisms that suppressed wage growth and generated a divergence of 43 percentage points (1.05 points per year) between net productivity and median hourly compensation growth between 1979 and 2017 in the United States. These dynamics reflect the strengthening of employers’ power relative to white-collar and blue-collar workers. We offer empirical assessments of the impact of particular factors on wage growth and wage inequality. The three factors with the largest and best measurement impacts, i.e., excessive unemployment, eroded collective bargaining, and corporate-driven globalization — explain 55 per cent of the divergence. Other factors — a diminished overtime salary threshold, employee misclassification, employer-imposed noncompete agreements, and corporate fissuring-subcontracting and major-buyer dominance — explain another 20 per cent. Together, these policy-related factors can account for threefourths of the 1979-2017 divergence between productivity and median hourly compensation growth.

Keywords: wage inequality; wage growth; productivity; compensation (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.csls.ca/ipm/41/IPM_41_Mishel.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sls:ipmsls:v:41:y:2021:3

Ordering information: This journal article can be ordered from
http://www.csls.ca

Access Statistics for this article

International Productivity Monitor is currently edited by Andrew Sharpe, Executive Director

More articles in International Productivity Monitor from Centre for the Study of Living Standards 170 Laurier Ave. W, Suite 604, Ottawa, ON K1P 5V5. Contact information at EDIRC.
Bibliographic data for series maintained by CSLS ( this e-mail address is bad, please contact ).