Labor concentration has not kept pace with labor productivity since the late 1970s | National


In recent decades, however, the link between productivity growth and wage growth has weakened. Experts call this phenomenon theproductivity-wage gap.” From the late 1940s to the late 1970s, the cumulative growth of labor productivity and non-management employee compensation closely tracked each other. But from the late 1970s, the growth rate of earnings began to level off, even as labor productivity continued to rise. The cumulative percentage change in productivity since the late 1940s is 253%, while wages have only increased 144% over the same period.

Industry is one of the critical factors that have influenced productivity trends. Research from the Bureau of Labor Statistics found that many of the industries with large productivity and wage gaps are those that have also experienced the largest productivity gains over the past few decades. Sectors like manufacturing have improved their productivity through automation and the relocation of jobs to cheaper labor markets. Meanwhile, technology-based industries like computer makers and software companies experienced a burst of innovation in the late 20th and early 21st centuries that contributed to rapid growth.

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