Growth is slow, job creation minimal, and real median earnings are in decline. However, for a small group of powerful people things are just dandy. The following chart from an Economic Policy Institute study highlights the enormous gains enjoyed by top CEOs relative to their production/nonsupervisory workers.
The next chart, from a different Economic Policy Institute study, highlights one reason for the divergent economic experiences of those at the top and almost everyone else.
As we can see, companies have generally been successful in maintaining a steady growth in real net productivity. They have also been successful in suppressing any increase in real hourly compensation for production/nonsupervisory workers. The growing gap between the two trends is the basis for these divergent economic experiences. Workers continue to create wealth but an ever greater share is being captured by those at the top.
The New York Times offers this look at the recent movement in median household income. Worthy of note is the fact that the decline continues despite the fact that the economy has officially been in expansion since June 2009.
As I previously discussed, a disproportionately large share of all new jobs created in the current economic expansion are low wage ones. Therefore, it should come as no surprise that growing numbers of people have concluded that economic expansion alone is insufficient to improve majority living and working conditions.
One consequence is the increasingly popular effort to push for a $15 an hour minimum wage. There are those that claim that such a high minimum wage is unthinkable. However, as the chart below from a Huffington Post article shows, if the federal minimum wage in 1968 had been adjusted annually by the rate of productivity growth it would have reached $18.30 in 2013.
It is important to add that many of the firms employing the greatest number of low wage workers have also enjoyed above average rates of productivity growth. One example is Walmart. As the New York Times explains:
[Walmart] is a remarkably innovative exploiter of the latest technologies . . . The economists Barry Bosworth and Jack E. Triplett of the Brookings Institution find in a new book, “Productivity in the U.S. Services Sector” (Brookings Institution Press), that retailing in general has contributed substantially to the nation’s productivity boom since the mid-1990’s. And Wal-Mart is the industry leader.
The Seattle, Washington city council recently approved a $15 an hour minimum wage for workers in the city. As the Guardian newspaper reports:
A University of Washington study (pdf) commissioned by the council said the increase would benefit 100,000 people working in the city, reduce poverty by more than one quarter and save the government money by reducing the number of people claiming food stamps and other welfare payments. The pay of full-time workers on the existing minimum wage would increase by about $11,000 a year.
Opposition to the increase in Seattle has centered on claims that it will drive enterprises with slender profit margins out of business and force restaurants, which employ the largest number of minimum wage workers in the city, to lay off people.
But studies of significant minimum wage increases (pdf) in San Francisco, Santa Fe and San Jose show no evidence of job losses.
This is just one of many efforts by people to change the way our economy operates. Hopefully these efforts will multiply and learn from each other, as well as broaden in terms of their constituencies and demands.