(US) Wages are so stagnant even the Federal Reserve has begun to notice (pardon, to confess)

Published on Systemic Disorder, Sept 29, 2016.

You are working harder while not making more. It isn’t your imagination. The latest research demonstrating this comes, interestingly, from the St. Louis branch of the United States Federal Reserve.

Perhaps the researchers examining the relation between wages and productivity hoped this work wouldn’t be noticed by the public, as it was published in an obscure publication, Economic Synopses, produced by the St. Louis Fed. Regardless, it is of interest. The two authors, B. Ravikumar and Lin Shao, not only found a divergence between rising productivity and stagnant wages in the current “recovery” from last decade’s economic collapse, but that this has been a consistent pattern.

The Economic Synopses paper found that labor productivity for U.S. workers has increased six percent since 2009, while wages have declined 0.5 percent. (The authors measure labor productivity as real total output divided by total hours worked and labor compensation as real total labor compensation divided by total hours worked.)

Looking back to the previous officially designated recession in the U.S., declared to have ended in 2001, the authors found that over the following five years productivity increased about 13 percent, while wages increased by about five percent. Overall, the authors summarize by demonstrating that wages have lagged productivity by a wide margin since 1950, with the gap beginning to widen in the 1970s. Productivity in 2016 is 3.8 times higher than it was in 1950, while wages are only 2.7 times greater.

Graph – Compensation and Productivity: Long-Term Trend: … //

… Ideology in the service of inequality: … //
… Productivity gains outstrip wages around the world: … //

… Because central banks have kept interest rates at extraordinarily low levels for years, the authors argue that high financial profits represent a “vast public subsidy to the financial system” and thus an “expropriation” that is “a hallmark of financialization.”

Federal Reserve researchers may have just discovered what has long been apparent to working people and “heterodox” economists, but aren’t going to offer any solutions, must less formulate critiques of the system that produces such results.

The harder you work, the richer the executives and bankers get. What if, instead, those who did the work reaped the rewards? That, however, will require a different system.

(full text, graphs, related links).

Related Link:

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