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

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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

20 Answers

Anonymous 0 Comments

Lots of Boomers.

Big workforce. A lot of competition in the labor market. Glut of talent for employers to choose from. Depressed wages.

That trend was prolonged, because Boomers birthed the millennial generation, which is now the largest workforce.

We are only now seeing the trend begin to reverse, because all the Boomers are retiring, and the replacement workforce is Gen Z, which is a very, very small generation comparatively. Labor power is coming back in a big way.

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