Largest Gap Between Worker’s Productivity and Compensation

In an article featured in The Economist, experts say workers productivity in work is at an all time high. Although, at the same time workers hourly compensation for their work is very low. The article is backed by a study done by the Bureau of Labor Statistics.

The study, illustrating the widening gap between growth of productivity for companies and real hourly compensation for workers over the 30 plus years.”

Alan Blinder, a Princeton Economist wrote last December, “When it comes to wages, the basic story of recent decades is redolent of Scrooge. Real average hourly earnings (excluding fringe benefits) now stand roughly at 1974 levels. Yes, that’s right, no real increase in over 35 years. That is an astounding, dismaying and profoundly ahistorical development. The American story for two centuries was one of real wages advancing more or less in line with productivity. But not lately. Since 1978, productivity in the nonfarm business sector is up 86%, but real compensation per hour (which includes fringe benefits) is up just 37%. Does that seem fair?”

I believe the reason for this is job uncertainty, people are willing to do more for less if that means they are ensured a job. Is this a new scare tactic bosses and CEO’s will eat up, or just the past replaying itself?



About internalmarket

This blog and its accompanying Twitter account have been established as social media learning tools for the Internal Communications and Employee Engagement class at Columbia College Chicago. Through this blog, we will share our observations about current events, change management and employee communications theory, and the application of social media in shaping employee engagement.
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