Real Wages Fail to Match a Rise in Productivity
By STEVEN GREENHOUSE and DAVID LEONHARDT
Published: August 28, 2006
With the economy beginning to slow, the current expansion has a chance to
become the first sustained period of economic growth since World War II
that fails to offer a prolonged increase in real wages for most workers.
That situation is adding to fears among Republicans that the economy will
hurt vulnerable incumbents in this year’s midterm elections even though
overall growth has been healthy for much of the last five years.
The median hourly wage for American workers has declined 2 percent since
2003, after factoring in inflation. The drop has been especially notable,
economists say, because productivity — the amount that an average worker
produces in an hour and the basic wellspring of a nation’s living
standards — has risen steadily over the same period.
As a result, wages and salaries now make up the lowest share of the
nation’s gross domestic product since the government began recording the
data in 1947, while corporate profits have climbed to their highest share
since the 1960’s. UBS, the investment bank, recently described the
current period as "the golden era of profitability."
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