Question

2. Discuss the evidence of the trends in wages and productivity from 1948 to 2010 in the US.

Answer 1

Productivity plays an important role for economic growth. When workers are compensated efficiently, productivity directly increases.

In late 1940s, the trend in US economy was that wages and benefits of workers rose in tandem with productivity. The hourly compensation rose to 6.24% in 1949 from 1948 and it kept on increasing till 1973.

Since 1973 wages and productivity have diverged as the hourly pay of typical workers stagnated. Americans are working more productively, however the fruits of their labor have primarily accrued to those at the top.

The wealth generated after 1973 has failed to trickle down to everyone as policies are increasingly being framed for the benefit of the corporate heads which has increased inequality.