REPORT United StatesWorkers

The Productivity to Paycheck Gap: 2019 Update

September 2019, Dean Baker

The gap between productivity growth and the pay of the typical worker is now widely recognized. Real wages used to rise roughly in step with productivity growth, but since 1979 there has been a sharp divergence between productivity growth and the pay of the median worker.

In an update of an earlier analysis, this paper examines these issues to determine the extent to which the typical worker lost out as a result of upward redistribution. In particular, the paper notes that productivity growth from 2005 to 2018, which includes the Great Recession, has been slower than for any sustained period on record.

An earlier analysis examined the productivity-to-pay gap from 1973 to 2006. The big difference between these two reports is the story of weak real growth in the years since 2005 is mostly a story of weak productivity growth, rather than primarily an issue of upward redistribution.

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