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Issues 2016: A Rising Tide (Still) Lifts All Boats—Wages Really Do Grow With Productivity

issue brief

Issues 2016: A Rising Tide (Still) Lifts All Boats—Wages Really Do Grow With Productivity

December 7, 2015
EconomicsEmploymentIncome Inequality

Abstract

American workers have done better than influential doomsayers claim. A historical review of labor’s share of economic output makes clear that U.S. workers continue to receive the same portion of the economic pie as they always have.

Key Findings

  • Between 1973 and 2007, at comparable points in the business cycle, hourly compensation rose at almost precisely the same rate as productivity.
  • In 1973, U.S. workers received 70 percent of the income produced by businesses; in 2007, they received 69 percent.
  • Middle-class pay has not stagnated: during 1997–2011, productivity rose by 35 percent, aggregate compensation rose by 32 percent, median hourly compensation increased by 20 percent, median female pay climbed by 25 percent, and median male pay grew by 18 percent.

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