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It would be pretty cool if we made decisions that led both to better pay for most Americans and for higher quality projects. We've destroyed the labor movement

It would be pretty cool if we made decisions that led both to better pay for most Americans and for higher quality projects. We've destroyed the labor movement so most workers have no bargaining power. Real wages have barely risen since 1980, despite huge gains in productivity. Then in order to make products cheap enough for impoverished workers to afford, we cut every corner we can.

millimeterman 4y ago
Real compensation has tracked with productivity gains quite nicely, though a growing gap did start to emerge in 2008. https://www.piie.com/blogs/realtime-economic-issues-watch/growing-gap-between-real-wages-and-labor-productivity https://www.piie.com/blogs/realtime-economic-issues-watch/gr... Two things that _are_ real issues are - Compensation includes benefits, and much of the increase in compensation has been eaten up by healthcare costs. This means wages haven't increased nearly as much. - There is a growing gap in productivity inequality within labor which has led to growing income inequality. Those productivity and income increases have disproportionately gone to the upper percentiles of workers.
- TaylorAlexander 4y ago
  > Real compensation has tracked with productivity gains quite nicely This goes counter to what I have read. For example: "Net productivity grew 59.7% from 1979-2019 while a typical worker’s compensation grew by 15.8%, according to EPI data..." https://www.epi.org/blog/growing-inequalities-reflecting-growing-employer-power-have-generated-a-productivity-pay-gap-since-1979-productivity-has-grown-3-5-times-as-much-as-pay-for-the-typical-worker/ https://www.epi.org/blog/growing-inequalities-reflecting-gro...
  - millimeterman 4y ago
    The EPI's numbers are wrong/misleading for a few reasons. - The productivity and compensation graphs are often inflation-adjusted using incomparable deflators. Productivity is measured using a GDP inflator (which includes investments) whereas compensation is measured using a CPI deflator (which only includes consumer products). CPI is historically higher[1] which means compensation is artificially being deflated more than productivity. - The most well-known graph from the EPI[2] shows productivity for all workers but shows compensation for only 80% of workers, with the provided reason being to exclude high earners like management and executives. Which, sure I guess, but surely the two metrics should be kept consistent. If you correct for these errors you end up finding a productivity/compensation gap that is much smaller than the EPI claims, though notably not zero. The EPI themselves have a figure that includes all workers and uses matching deflators ([3], figure C, "Real producer average hourly consumption") so perhaps some of the blame here is on readers. I think this BLS paper on the subject[4] is well worth a read. An interesting result they found is that the industry with the greatest productivity/compensation gap is...computing. Probably not the jobs people usually imagine when they think of stagnating pay. 1. https://www.bls.gov/opub/mlr/2016/article/comparing-the-cpi-with-the-gdp-price-index-and-gdp-implicit-price-deflator.htm https://www.bls.gov/opub/mlr/2016/article/comparing-the-cpi-... 2. https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/ 3. https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/ https://www.epi.org/publication/understanding-the-historic-d... 4. https://www.bls.gov/opub/btn/volume-6/pdf/understanding-the-labor-productivity-and-compensation-gap.pdf https://www.bls.gov/opub/btn/volume-6/pdf/understanding-the-...
    - TaylorAlexander 4y ago
      Interesting, I will take a look thanks!

millimeterman 4y ago

Real compensation has tracked with productivity gains quite nicely, though a growing gap did start to emerge in 2008. https://www.piie.com/blogs/realtime-economic-issues-watch/growing-gap-between-real-wages-and-labor-productivity https://www.piie.com/blogs/realtime-economic-issues-watch/gr... Two things that _are_ real issues are - Compensation includes benefits, and much of the increase in compensation has been eaten up by healthcare costs. This means wages haven't increased nearly as much. - There is a growing gap in productivity inequality within labor which has led to growing income inequality. Those productivity and income increases have disproportionately gone to the upper percentiles of workers.

TaylorAlexander 4y ago
> Real compensation has tracked with productivity gains quite nicely This goes counter to what I have read. For example: "Net productivity grew 59.7% from 1979-2019 while a typical worker’s compensation grew by 15.8%, according to EPI data..." https://www.epi.org/blog/growing-inequalities-reflecting-growing-employer-power-have-generated-a-productivity-pay-gap-since-1979-productivity-has-grown-3-5-times-as-much-as-pay-for-the-typical-worker/ https://www.epi.org/blog/growing-inequalities-reflecting-gro...
- millimeterman 4y ago
  The EPI's numbers are wrong/misleading for a few reasons. - The productivity and compensation graphs are often inflation-adjusted using incomparable deflators. Productivity is measured using a GDP inflator (which includes investments) whereas compensation is measured using a CPI deflator (which only includes consumer products). CPI is historically higher[1] which means compensation is artificially being deflated more than productivity. - The most well-known graph from the EPI[2] shows productivity for all workers but shows compensation for only 80% of workers, with the provided reason being to exclude high earners like management and executives. Which, sure I guess, but surely the two metrics should be kept consistent. If you correct for these errors you end up finding a productivity/compensation gap that is much smaller than the EPI claims, though notably not zero. The EPI themselves have a figure that includes all workers and uses matching deflators ([3], figure C, "Real producer average hourly consumption") so perhaps some of the blame here is on readers. I think this BLS paper on the subject[4] is well worth a read. An interesting result they found is that the industry with the greatest productivity/compensation gap is...computing. Probably not the jobs people usually imagine when they think of stagnating pay. 1. https://www.bls.gov/opub/mlr/2016/article/comparing-the-cpi-with-the-gdp-price-index-and-gdp-implicit-price-deflator.htm https://www.bls.gov/opub/mlr/2016/article/comparing-the-cpi-... 2. https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/ 3. https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/ https://www.epi.org/publication/understanding-the-historic-d... 4. https://www.bls.gov/opub/btn/volume-6/pdf/understanding-the-labor-productivity-and-compensation-gap.pdf https://www.bls.gov/opub/btn/volume-6/pdf/understanding-the-...
  - TaylorAlexander 4y ago
    Interesting, I will take a look thanks!