The decline in the U.S. industrial base over the past couple of decades is the main factor eroding the share of American national income that goes to middle-class workers, according to consultants at McKinsey & Co.
For decades, labor’s share of gross domestic product has shrunk—while the share that goes to capital like profits, interest and rent, has risen. The McKinsey Global Institute, the firm’s research arm, finds that manufacturing accounts for more than two-thirds of the overall decline in labor’s share of gross domestic product since 1990. That, in turn, has harmed the prospects of the middle class and widened income inequality.
Wages are supposed to track worker productivity, and from the end of World War II until 1973 they did. Then, something happened: Productivity kept rising but wages did not. Many on the left argue the link is now broken and redistributing income from the wealthy downward would help workers more than faster economic growth. But a new study co-authored by Harvard University economist Lawrence Summers says that’s wrong. He and Anna Stansbury, a doctoral student at Harvard, found a strong and persistent link between hourly productivity and a variety of wage measures since 1973. The problem, they conclude, is that the positive influence of productivity on pay has been overwhelmed by other forces pushing the other way.
he Sacramento City Unified School District and the teachers union have reached an agreement on a new contract that gives teachers up to an 11 percent raise over the three-year contract and averts a strike for the 43,000-student district. . . . The new deal will give teachers a 2.5 percent raise retroactive to July 1, 2016 and another 2.5 percent raise retroactive to July 1 of this year. A third 2.5 percent raise will be given July 1, 2018.
The contract includes another 3.5 percent adjustment to the teacher salary schedule that will take effect in the third year of the contract, starting July 1, 2018.
As CalSTRS rates are more than doubling, squeezing school budgets, an inflation-protection account that keeps teacher pensions from dropping below 85 percent of their original purchasing power has a large and growing excess of funding, $5.6 billion last year.
Double-digit salary increases for San Francisco educators proposed under contract terms agreed to over the weekend are among the highest being offered in the state, union and school district officials said a day after the two sides signed off on a tentative agreement. If approved by the 6,200 members of the United Educators of San Francisco, the city’s school workforce of teachers, early childhood educators, librarians, nurses, classroom assistants and social workers would receive an 11 percent raise over three years, in addition to annual bonuses. The overall compensation package would grow to 16 percent pending passage of a parcel tax that many city leaders hope to place on the ballot next year.