Most Americans believe that a rising tide should lift all boats—that as the economy expands, everybody should reap the rewards. This outcome can be guaranteed by smart and compassionate policy choices or subverted by policymakers choosing a different path. EPI’s Productivity–Pay Tracker shows the shift toward the latter: Since the late 1970s, our policy choices have led directly to a pronounced divergence between productivity and typical workers’ pay. It doesn’t have to be this way.

As we have tracked throughout the recovery from the COVID-19 recession, fatter profit margins have played a historically outsized role in driving price inflation. Between 1979 and 2019, profits contributed an average of 11.4% to prices. Since the second quarter of 2020 (the official end of the COVID-19 recession), profits’ contribution has been many times larger than their norm. Through 2021 as inflation first spiked, profits explained more than half of price growth. Throughout 2022, this profit contribution has shrunk, but only slowly and by the 3rd quarter of this year profits will still contribute well over 3 times as much to price growth as is normal.

The third and final economic impact stimulus payment was measurably effective in alleviating economic distress, keeping close to 9 million people from poverty. The stimulus payment likely reached many who were ineligible for Social Security, the EITC, or CTC and who were still struggling from the effects of the pandemic shock to the economy. The sheer number of people this program supported underscores the success of direct income support programs.