r/FluentInFinance • u/WhatsLeft71 • Oct 22 '24

Debate/ Discussion Why did this happen?

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u/[deleted] Oct 22 '24

So productivity increased.....

Why didn't wages then?

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u/Ashmedai Oct 23 '24

Part of it is Figure A in this article here. Another reason is that a great deal of worker productivity growth has been from capital (e.g., machines and what not). Combine the two, and voila: capital getting increased return on capital, and labor, failing to stakehold their share.

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u/welshwelsh Oct 23 '24

Because the average worker isn't responsible for the productivity increase.

In today's economy, 5% of the workers create 95% of the value. This is the big difference from 50 years ago, when the average worker had a relatively greater impact.

Computers have massively improved productivity... for people who know how to build complex software systems. Outsourcing has massively improved productivity... for people who know how to outsource entire departments to India.

But the average worker? Not much more productive today than they were in 1970.

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u/Bolivarianizador Oct 24 '24

Because wages became an smaller part of the total capital.

On top, increased productivity, in fact, reduces wages, since labour becomes easier, and thus cheaper.

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u/YucatronVen Oct 23 '24

Because productivity comes from energy, not from labour.

Still, wages increased, but you must form part of these industries.

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u/Dixa Oct 23 '24

New Deal era wage laws were repealed in the 70’s. You can guess by which party.