The growth of inequalities is the central driver of the widening gap between the hourly compensation of a typical (median) worker and productivity—the income generated per hour of work—in recent decades. Specifically, this growing divergence has been driven by the growth of two distinct dimensions of inequality: the surge of compensation received by the top 10%—particularly the top 1.0% and top 0.1%—and the erosion of labor’s share of income and the corresponding growth of capital’s share. This post documents these trends by presenting an updated account of the U.S. productivity-pay divergence originally analyzed in both Mishel and Gee 2012 and Bivens and Mishel 2015. 

The key metric, as explained below, is the lag between the growth of net productivity (taking into account depreciation and evaluated using consumer prices) and hourly compensation (wages and benefits) of a typical or median worker. Between 1979 and 2019, net productivity grew 59.7% while a typical (median) worker’s compensation grew by 15.8%, a 43.9 percentage point divergence driven by inequality. The effects have been felt broadly: During this period, 90% of U.S. workers experienced wage growth (26%) far slower than the economywide average, while workers in the top 1% (mostly highly credentialed professionals and corporate managers) saw 160% wage growth (Mishel and Kandra 2020) and owners of capital reaped large rewards made possible only by this anemic wage growth for the bottom 90%.

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While the official pandemic recession ended two months after it began, it is clear that the pandemic is not behind us and its ebbs and flows exert powerful effects on economic growth. The seven-day moving average of U.S. COVID-19 cases rose more than fivefold, from 24,000 per day to 126,000 per day between July 12 and August 12, 2021, roughly representing the reference period for each month’s labor market report. The economic effects of this surge will likely be reflected in the jobs numbers we receive on Friday as segments of the U.S. workforce still face health and safety risks of continuing to work in person. This emphasizes the importance of continuing to provide a safety net for workers and their families—including by keeping in place federal pandemic unemployment insurance (UI) benefits—as health and safety-related closures and protective measures are reinstated.

While the job growth numbers in June and July (938,000 and 943,000, respectively) provided strong evidence that the labor market is revving back up in response to fiscal stimulus and widespread vaccinations, it is likely that the August job growth numbers may be more muted. The fivefold increase in COVID-19 cases is likely one of the reasons that restaurant seating appears to have softened between July and August.

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Unions across the country are working on doing what’s right for society and their members when it comes to COVID-19 vaccine mandates. But there has been some misplaced criticism directed toward unions, especially public-sector unions who engage in “impact bargaining” with their employer over COVID-19 vaccine mandates.

To put it all in perspective, Dave Kamper, senior state policy coordinator for the Economic Analysis and Research Network (EARN) at the Economic Policy Institute, took to social media to break down the mandate issue and also to explain how impact bargaining isn’t about refusing to follow mandates, but about how changes are implemented and how they impact working conditions.

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Thousands are expected this week in the forested hills of southern West Virginia to commemorate the 100th anniversary of the Battle of Blair Mountain—a key conflict in labor history.

In the late summer of 1921, at least 7,000 coal miners affiliated with the United Mine Workers of America (UMWA) fought for their rights and their livelihoods in a weeklong fight against a private army that was raised by the coal companies and supported by the National Guard and the U.S. Army Air Force. The battle was the climax of two decades of low-intensity warfare across the coalfields of Appalachia, and it remains the largest battle on U.S. soil since the end of the Civil War.

The battle is also a stark reminder of the importance of protecting workers’ right to organize. It’s not simply about balancing the economic scales; it’s about power. When workers do not have power—when they have no voice in their workplace and no voice in how the nation is governed—exploitation and violence by the state are the inevitable result.

Today, workers still face a lack of power. A great way to empower workers would be through passing the Protecting the Right to Organize (PRO) Act, which is currently being considered by Congress and was renamed after former UMWA President Richard Trumka following his passing earlier this month. The story of the Battle of Blair Mountain demonstrates how, a hundred years on, workers are at the mercy of the powerful unless they have unions and power of their own.

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The July state employment and unemployment data released Friday by the Bureau of Labor Statistics (BLS) showed that the strong job growth reported earlier this month in the national jobs data was widespread throughout the country. And, notably, the states that chose not to cut pandemic unemployment insurance (UI) benefits have experienced, on average, greater job growth in recent months than states that cut benefits to unemployed workers. 

Over the last three months (from April to July), all but three states—Alaska, Kentucky, and Wyoming—added jobs, with particularly strong growth in Hawaii (4.0%), Vermont (3.5%), North Carolina (2.7%), Arizona (2.6%), and New Mexico (2.5%). Figure A shows each state’s July unemployment rate and the change in employment over the past three months, 12 months, and since February 2020 (the month before the recession.) 

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The labor movement lost a giant last week. Richard Trumka was a champion for workers’ rights and a passionate leader of the labor movement. In addition to serving as President of the AFL-CIO, Trumka served as Chairman of EPI’s board of directors since 2012. Under President Trumka’s leadership, EPI and AFL-CIO have shared an unwavering commitment to advancing workers’ rights and strengthening unions.

For President Trumka, “the next frontier” for U.S. workers was the Protecting the Right to Organize (PRO) Act. Passing the PRO Act would restore workers’ ability to organize with their co-workers and would allow them to negotiate for better pay, benefits, and fairness on the job. Passing the PRO Act would also promote greater racial economic justice because unions and collective bargaining help shrink the Black–white wage gap.

Every day, corporations openly bust unions and retaliate against working people without consequence. President Trumka spent his career fighting these attacks on working people’s right to organize and collectively bargain. We need meaningful policy changes to restore a fair balance of power between workers and employers. That is why Congress must pass the PRO Act.

As President Trumka said on June 29, “the single best agent for change is the PRO Act.” We at EPI will honor his memory by continuing to advance policies like the PRO Act that are critical to workers and a fair economy.