Inside the Fight Over Productivity and Wages
One feature of the new EPI analysis is a nifty table (see page 8) that goes some way towards answering why the gap has widened. The table highlights how between 1995 and 2000, labor’s share of income grew, despite larger-than-usual growth in inequality of compensation. Why? Because when labor markets are tight and productivity is rising–two features of that five-year-long golden age—workers’ pay will rise. This suggests that pursuing full employment, generally considered a 5% unemployment rate or below, could go a long way towards generating long-hoped-for upwards wage pressures throughout the economy.