Are Corporations Really Hogging Workers’ Wages?

Andrew Kliman is the author of The Failure of Capitalist Production. In a new article for he looks at productivity and wages, and dissects the ever expanding gap between them. We’ve reproduced an extract below. You can read the full thing on the truthdig website, here.

Buy The Failure of Capitalist Production with 10% off from Pluto PressWhat if some of the most respected economists in the world told you that as an employee, your pay is 40 percent lower than it would be if it had increased in recent decades at the same rate as your productivity? If you are a typical American worker, that is how large the gap in your pay became by 2011, according to the Economic Policy Institute, one of the most trusted liberal think tanks in the nation.

In its 2012 study, “The State of Working America,” the EPI reported that between 1973 and 2011, the goods and services produced per hour of work (which economists call productivity) in the American economy “grew strongly, especially after 1995, while the typical worker’s compensation was relatively stagnant.” Productivity increased by more than 80 percent in the interim, even after adjusting for inflation, but the hourly compensation of those who held production and nonsupervisory positions increased by less than 11 percent. The EPI contended that this “divergence of pay and productivity has meant that many workers were not benefiting from productivity growth—the economy could afford higher pay but was not providing it.”

The “productivity/compensation gap,” as journalists and academics call it, has become a flashpoint in the debate over income inequality. Equipped with statistics like those produced by the EPI, trusting activists and members of the press point to the supposed gap as proof that corporate profits have been rising at the expense of employees’ compensation—not just since the Great Recession, but throughout the last four decades. (For an example of such a claim, see the piece written by Doug Henwood, editor of the Left Business Observer, in the opinion pages of March 30’s New York Times.)

To read the rest of this article, go to

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