If you want to understand what has been going on with the economy since World War II, you should start with this chart from the Talking Points Memo website. (You should also start with the accompanying story there, of course, but the chart — the original version where you can more easily line up the dates is here — speaks loudly for itself.)
The orange line shows the increase in worker productivity in the post-war years. The green line shows non-supervisory workers’ real wages (adjusted for inflation.) Where the lines overlap, as they did more than a quarter century after the war, increases in productivity are matched by increases in wages. In other words, we were becoming a more efficient society and we were all sharing in the benefits of it.
Eyeballing the chart, it looks like the first big downward jag in wages came at the time of the Yom Kippur War in 1972, which led to the first big “oil shock.” (Do younger people even know about the oil shocks of 1973 and 1978-79? We haven’t had anything quite like them since. We have “gas lines” every day at Costco but not the sorts of ones that we had everywhere back in those days, where the state only allowed people to get gas on certain days depending on their license numbers. You can look it up.) Even then, after 1973 wages recovered and began to move parallel to — although at a lower level than — productivity.
After then, virtually none of the gains in productivity (or efficiency) have gone into increasing worker income. Workers below the supervisory level have not shared in the benefits of technology and other efficiencies at all.
When people talk about how industry is hurting, remember this chart — and ask people to explain it. My explanation is — employers have taken gains that used to be shared across society and kept them for themselves and their closest agents. Pretty simple, pretty devastating.
The early to mid-seventies, that’s the time the babies boomers started pushing the liberal agenda of everything should be free.
When you don’t work and just thrust your hand out for freebies, your gains, if any, will be small.
And with fewer people really working, their productive would rise because the work necessary to be done still must be done. (Even if slave labor from Latin American countries needs to be imported to fill the gap)
You could also say this chart is a measurement of the overall success of policies put into place by the democrat party controlled elected governments in the USA.
Rich people are bad, working people are bad, lazy ass freeloaders are good.
What we need is a “Auto style lemon law” on bad government policies, so the politicians would not be allowed to sell the citizens the same bag of crap over and over again.
The early to mid-seventies was actually the decline of the liberal class as it was known and the ascent of economic neoliberalism (a bipartisan effort) What the chart illustrates is how that dynamic created vast economic inequalities.
Yes, us young folk remember history and know about the oil shock, but the real driver of the gap is the ascendancy of financialization over manufacturing as the base of the U.S. economy. De-industrialization subsequently started to take place and with that unionism and the benefits it could offer in the private sector to workers who would otherwise take home a fairer share of their wealth creation tapered off in a major way.
Now, we have this cascading descent into a neoliberal dystopia…one that can not be reversed electorally by the likes of Clinton and Obama.
I’ll really take my chances fighting this shit with Obama as president rather than Romney. You may say it makes us complacent, I say it moves the goal posts a little closer.
Look at the goal posts as charted above! It’s getting so wide a blindfolded man could kick a field goal through it!
Very interesting chart in deed. When I first saw the chart the first thing that popped into my mind is how it shows that it is better economically to be an owner or supervisor compared to a worker. The second thing was likely how much technology has pushed productivity up through efficiency- not sure if it is entirely true or not, but if I can buy a computer program for $5K that can replace a worker who used to make $25K, then the owner who is deploying that capital will get rewarded. The other workers will likely not get rewarded at the same pace, if at all.
I am not sure if it is necessarily something to be blamed on owners though in terms of if they pay for capital, they will get rewarded for it. I think we would (or should at least) all love to have that everyone’s income go up at the top line rate, but can one group (i.e. workers) vilify another group (i.e. owners) for utilizing capital to raise efficiency.
Lastly, after reading the EPI’s article by Mishel on the above chart and others, it is clear that there are some really smart data interpreters out there…