Why is there a gap between productivity vs wage, that began in the 70s?

Question

I think everyone’s seen the famous graph from the Economic Policy Institute, that show that while Productivity has been growing in a steady and linear fashion decades after decades, wage began to stagnate in the 70s.

Since the 70s, wage have grown about +0.6% per year, while productivity has grown at an average of 1.4% per year. That gap is enormous and it is compounding over time.

Can someone me why it’s happened?

In: Economics

Answer 1

Computers. Once we started making software and using computers, we could rapidly take advantage of automation. Software can be copied and sold eternally at very low cost per multiple. Software as service replaces entire workforces. The average employee does not get to see the benefits of this huge increase in productivity, the company owners do. Productivity increased with computers, simple as that.