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

The chart you’re referring to does not show productivity vs all wages, it shows productivity of the entire economy vs wages of manufacturing workers.  The US economy has mostly moved away from manufacturing, and is now service-based. 

Also, it only shows wages.  It doesn’t show increases in health insurance, retirement benefits, or paid time off.