The widening productivity-pay gap
Below is an abstract of a WorldatWork member-only article at The Journal of Total Rewards. You can learn more about the productivity-pay gap here.
This paper focuses on the historical divergence between typical workers’ compensation and economy-wide productivity, and the implications of this divergence for workplace inequality. Commonly referred to as the “pay-productivity gap”, we show that while inflation-adjusted pay and productivity grew in lock step from the end of WWII until the 1970s, productivity has outpaced pay since 1979. We use publicly available data sources to document this gap and discuss key methodological considerations.
We argue that the equal growth in pay and productivity before 1979 and the subsequent fracturing were driven near-entirely by intentional policy decisions. Beginning in 1979, the efforts by employers and capital-owners to undercut the bargaining power of typical workers in labor markets through policies such as deregulation, corporate-led globalization, erosion of the minimum wage, deunionization, macroeconomic policies that tolerated excess unemployment, and tax cuts for high earners led to a divergence in pay and productivity that has yet to be remedied. Not only have these intentional policy decisions created a large pay-productivity gap since 1979, but they have also coincided with a productivity slow-down across the total economy during this time period, resulting in growth that was slower and less equal.
The gap between productivity and a typical worker’s compensation has increased dramatically since 1979: Productivity growth and hourly compensation growth, 1948–2025
| Year | Productivity | Pay |
|---|---|---|
| 1948q1 | 100 | 100 |
| 1948q2 | 101.2 | 100.8 |
| 1948q3 | 100.8 | 100.8 |
| 1948q4 | 102.7 | 103.1 |
| 1949q1 | 102.2 | 105.4 |
| 1949q2 | 101.3 | 106.6 |
| 1949q3 | 104.7 | 109 |
| 1949q4 | 104.7 | 110.3 |
| 1950q1 | 108.9 | 111.8 |
| 1950q2 | 110.1 | 112.4 |
| 1950q3 | 112.1 | 111.7 |
| 1950q4 | 112.9 | 112.1 |
| 1951q1 | 111.5 | 110.2 |
| 1951q2 | 111.6 | 111.2 |
| 1951q3 | 114.4 | 113.5 |
| 1951q4 | 114.3 | 113.7 |
| 1952q1 | 114.3 | 114.4 |
| 1952q2 | 114.9 | 115.8 |
| 1952q3 | 115.3 | 115.8 |
| 1952q4 | 117.5 | 117.3 |
| 1953q1 | 119.9 | 119.6 |
| 1953q2 | 120.5 | 120.6 |
| 1953q3 | 120.2 | 121.8 |
| 1953q4 | 119.7 | 122.6 |
| 1954q1 | 120.3 | 123.7 |
| 1954q2 | 121.8 | 124.5 |
| 1954q3 | 123.7 | 125.3 |
| 1954q4 | 126.8 | 127.8 |
| 1955q1 | 128.8 | 128.4 |
| 1955q2 | 131.2 | 130.2 |
| 1955q3 | 131.3 | 130.6 |
| 1955q4 | 131.8 | 132.3 |
| 1956q1 | 132.4 | 134.2 |
| 1956q2 | 132.3 | 134.5 |
| 1956q3 | 132.3 | 134.8 |
| 1956q4 | 134.3 | 135.8 |
| 1957q1 | 135.9 | 136.4 |
| 1957q2 | 136 | 137.5 |
| 1957q3 | 136.4 | 137.9 |
| 1957q4 | 136.5 | 138.5 |
| 1958q1 | 135 | 137.5 |
| 1958q2 | 136.3 | 138 |
| 1958q3 | 139.6 | 138.8 |
| 1958q4 | 141.9 | 140 |
| 1959q1 | 143.4 | 142 |
| 1959q2 | 144.2 | 143 |
| 1959q3 | 144.5 | 142.8 |
| 1959q4 | 144.5 | 143.3 |
| 1960q1 | 148 | 144.3 |
| 1960q2 | 145.9 | 145.6 |
| 1960q3 | 146.2 | 146.2 |
| 1960q4 | 144.9 | 146.5 |
| 1961q1 | 146.6 | 147.6 |
| 1961q2 | 151.1 | 148.4 |
| 1961q3 | 152.8 | 148.5 |
| 1961q4 | 153.8 | 149.1 |
| 1962q1 | 155.7 | 151 |
| 1962q2 | 155.6 | 151.6 |
| 1962q3 | 157.4 | 152.3 |
| 1962q4 | 158.9 | 153.3 |
| 1963q1 | 160.7 | 154.7 |
| 1963q2 | 161.8 | 155.8 |
| 1963q3 | 163.8 | 155.3 |
| 1963q4 | 165.4 | 157.2 |
| 1964q1 | 167.4 | 158 |
| 1964q2 | 167 | 158.6 |
| 1964q3 | 169.6 | 160.3 |
| 1964q4 | 168.7 | 160.4 |
| 1965q1 | 171.1 | 161.6 |
| 1965q2 | 171.4 | 162.4 |
| 1965q3 | 175 | 163.1 |
| 1965q4 | 178.5 | 164.8 |
| 1966q1 | 179.3 | 165.1 |
| 1966q2 | 178.2 | 165.4 |
| 1966q3 | 178.7 | 165.6 |
| 1966q4 | 179.4 | 165.7 |
| 1967q1 | 180.1 | 166.8 |
| 1967q2 | 181.7 | 168.5 |
| 1967q3 | 181.5 | 168.7 |
| 1967q4 | 182.3 | 169.2 |
| 1968q1 | 186.3 | 170.6 |
| 1968q2 | 187.6 | 171.1 |
| 1968q3 | 187.9 | 172.2 |
| 1968q4 | 188 | 172.9 |
| 1969q1 | 189.7 | 175.1 |
| 1969q2 | 188.8 | 175.1 |
| 1969q3 | 190.4 | 176.2 |
| 1969q4 | 189.6 | 177.2 |
| 1970q1 | 190.1 | 176.4 |
| 1970q2 | 191.9 | 176.8 |
| 1970q3 | 195.3 | 178.6 |
| 1970q4 | 193.9 | 178.9 |
| 1971q1 | 200 | 181.1 |
| 1971q2 | 200.8 | 182.1 |
| 1971q3 | 203.2 | 183.5 |
| 1971q4 | 202.6 | 184.9 |
| 1972q1 | 204.7 | 189.6 |
| 1972q2 | 209.2 | 191.6 |
| 1972q3 | 211 | 193.1 |
| 1972q4 | 213.7 | 193.9 |
| 1973q1 | 214.8 | 193.8 |
| 1973q2 | 213.8 | 192.1 |
| 1973q3 | 211.4 | 191.6 |
| 1973q4 | 211.8 | 189.9 |
| 1974q1 | 207.3 | 188.1 |
| 1974q2 | 207.8 | 187.6 |
| 1974q3 | 206 | 187.5 |
| 1974q4 | 207 | 186.6 |
| 1975q1 | 209.3 | 186.9 |
| 1975q2 | 212.2 | 187.5 |
| 1975q3 | 214.3 | 186.9 |
| 1975q4 | 214.7 | 186.6 |
| 1976q1 | 216.6 | 187.3 |
| 1976q2 | 218.1 | 188.7 |
| 1976q3 | 218.1 | 189.9 |
| 1976q4 | 218.6 | 190.7 |
| 1977q1 | 219.4 | 191.5 |
| 1977q2 | 218.6 | 191.8 |
| 1977q3 | 221.1 | 193.1 |
| 1977q4 | 220.3 | 193.5 |
| 1978q1 | 219.5 | 195 |
| 1978q2 | 222.7 | 195 |
| 1978q3 | 222.5 | 194.8 |
| 1978q4 | 224 | 195.4 |
| 1979q1 | 221.7 | 195.1 |
| 1979q2 | 220.7 | 193 |
| 1979q3 | 218.9 | 192.2 |
| 1979q4 | 216.8 | 190.7 |
| 1980q1 | 215.7 | 188.3 |
| 1980q2 | 212.9 | 188.2 |
| 1980q3 | 212.8 | 187.9 |
| 1980q4 | 214.7 | 187.7 |
| 1981q1 | 217.9 | 186.8 |
| 1981q2 | 216.8 | 187.3 |
| 1981q3 | 219.2 | 187.2 |
| 1981q4 | 216 | 186.5 |
| 1982q1 | 215.4 | 187.3 |
| 1982q2 | 215.1 | 187.8 |
| 1982q3 | 214.9 | 187.5 |
| 1982q4 | 215.9 | 187.1 |
| 1983q1 | 218.7 | 189.2 |
| 1983q2 | 221.7 | 188.9 |
| 1983q3 | 223 | 188.6 |
| 1983q4 | 225.2 | 188.5 |
| 1984q1 | 225.5 | 188 |
| 1984q2 | 226.9 | 187.7 |
| 1984q3 | 228.2 | 187.6 |
| 1984q4 | 228.7 | 187.4 |
| 1985q1 | 229.9 | 187.2 |
| 1985q2 | 229.9 | 187.3 |
| 1985q3 | 232.5 | 187.6 |
| 1985q4 | 232.3 | 187.2 |
| 1986q1 | 234.2 | 187.4 |
| 1986q2 | 237.1 | 189.4 |
| 1986q3 | 237.9 | 189.4 |
| 1986q4 | 236.7 | 189.3 |
| 1987q1 | 234.5 | 187.8 |
| 1987q2 | 235.2 | 187 |
| 1987q3 | 235.1 | 186.4 |
| 1987q4 | 237 | 186.4 |
| 1988q1 | 237.6 | 186.3 |
| 1988q2 | 238 | 186.4 |
| 1988q3 | 239 | 186.1 |
| 1988q4 | 239.6 | 186.7 |
| 1989q1 | 239.7 | 186.8 |
| 1989q2 | 239.8 | 186 |
| 1989q3 | 240.8 | 186.6 |
| 1989q4 | 240.4 | 187.1 |
| 1990q1 | 241.6 | 186.8 |
| 1990q2 | 243.5 | 186.6 |
| 1990q3 | 241.7 | 184.9 |
| 1990q4 | 237.7 | 183.8 |
| 1991q1 | 238.9 | 184.5 |
| 1991q2 | 242.7 | 185.7 |
| 1991q3 | 244.3 | 186.2 |
| 1991q4 | 245.1 | 186.4 |
| 1992q1 | 249 | 186.7 |
| 1992q2 | 250.9 | 187.4 |
| 1992q3 | 253.5 | 187.7 |
| 1992q4 | 254.6 | 187 |
| 1993q1 | 253.4 | 188.3 |
| 1993q2 | 252 | 187.5 |
| 1993q3 | 252.8 | 187.7 |
| 1993q4 | 254.5 | 187.8 |
| 1994q1 | 255.6 | 188.8 |
| 1994q2 | 255.1 | 188.2 |
| 1994q3 | 253.8 | 188 |
| 1994q4 | 256.3 | 188.2 |
| 1995q1 | 255 | 187.5 |
| 1995q2 | 255 | 187.2 |
| 1995q3 | 255 | 187.5 |
| 1995q4 | 256.8 | 187.8 |
| 1996q1 | 258.3 | 187.6 |
| 1996q2 | 259.1 | 187.5 |
| 1996q3 | 259 | 188.1 |
| 1996q4 | 258.9 | 187.9 |
| 1997q1 | 259.3 | 188.3 |
| 1997q2 | 262.2 | 189.4 |
| 1997q3 | 264.4 | 190.4 |
| 1997q4 | 264.9 | 191.6 |
| 1998q1 | 265.7 | 192.9 |
| 1998q2 | 266.3 | 194.3 |
| 1998q3 | 269.5 | 195 |
| 1998q4 | 270.9 | 195.8 |
| 1999q1 | 273.8 | 196.9 |
| 1999q2 | 272.4 | 197.2 |
| 1999q3 | 273.8 | 197.7 |
| 1999q4 | 276.3 | 198 |
| 2000q1 | 273.2 | 196.9 |
| 2000q2 | 277.9 | 198.1 |
| 2000q3 | 277.8 | 198.4 |
| 2000q4 | 280.7 | 200 |
| 2001q1 | 278.4 | 200.4 |
| 2001q2 | 281.7 | 201.6 |
| 2001q3 | 282.2 | 202.9 |
| 2001q4 | 285.8 | 205 |
| 2002q1 | 290.7 | 206.3 |
| 2002q2 | 290.5 | 206.3 |
| 2002q3 | 292 | 207.5 |
| 2002q4 | 292.4 | 209.1 |
| 2003q1 | 294.2 | 209.2 |
| 2003q2 | 299.9 | 210.6 |
| 2003q3 | 304 | 210.4 |
| 2003q4 | 307.3 | 210 |
| 2004q1 | 307.3 | 210 |
| 2004q2 | 309.9 | 209.8 |
| 2004q3 | 311.6 | 210 |
| 2004q4 | 312.8 | 209.3 |
| 2005q1 | 316.2 | 210.2 |
| 2005q2 | 316.7 | 210.5 |
| 2005q3 | 315.9 | 209.1 |
| 2005q4 | 316.7 | 209 |
| 2006q1 | 319.1 | 209.6 |
| 2006q2 | 318.4 | 210.1 |
| 2006q3 | 316.6 | 210 |
| 2006q4 | 319.8 | 212.6 |
| 2007q1 | 321.4 | 212.5 |
| 2007q2 | 321.3 | 212.9 |
| 2007q3 | 323.2 | 213.7 |
| 2007q4 | 322.7 | 212.7 |
| 2008q1 | 319.2 | 212.6 |
| 2008q2 | 319.3 | 212.2 |
| 2008q3 | 316.9 | 211 |
| 2008q4 | 321.9 | 217.6 |
| 2009q1 | 327.4 | 222.4 |
| 2009q2 | 331.1 | 222.5 |
| 2009q3 | 333.7 | 222.1 |
| 2009q4 | 337.1 | 222.1 |
| 2010q1 | 338.7 | 224 |
| 2010q2 | 340.6 | 224.9 |
| 2010q3 | 344.6 | 225.2 |
| 2010q4 | 344.7 | 224.8 |
| 2011q1 | 341 | 223.7 |
| 2011q2 | 339.1 | 222.1 |
| 2011q3 | 338.2 | 221.3 |
| 2011q4 | 338.6 | 221.4 |
| 2012q1 | 340.1 | 219.9 |
| 2012q2 | 341.9 | 220.4 |
| 2012q3 | 339.9 | 220.6 |
| 2012q4 | 339.6 | 219.8 |
| 2013q1 | 342.4 | 221.4 |
| 2013q2 | 343.5 | 223.1 |
| 2013q3 | 344.8 | 223.5 |
| 2013q4 | 347 | 224 |
| 2014q1 | 344.2 | 223.7 |
| 2014q2 | 345.9 | 223.5 |
| 2014q3 | 349 | 223.9 |
| 2014q4 | 348.5 | 225.2 |
| 2015q1 | 352.1 | 228.1 |
| 2015q2 | 353.7 | 227.8 |
| 2015q3 | 354.7 | 228.2 |
| 2015q4 | 353.6 | 229.9 |
| 2016q1 | 354.6 | 231.5 |
| 2016q2 | 354.4 | 231.1 |
| 2016q3 | 355.4 | 231.5 |
| 2016q4 | 357.9 | 231.4 |
| 2017q1 | 357.8 | 231.2 |
| 2017q2 | 357.9 | 232.4 |
| 2017q3 | 361.4 | 233.2 |
| 2017q4 | 362.7 | 232.8 |
| 2018q1 | 364 | 233.2 |
| 2018q2 | 364.5 | 234.1 |
| 2018q3 | 365.5 | 235.2 |
| 2018q4 | 365.2 | 236.7 |
| 2019q1 | 367.3 | 237.7 |
| 2019q2 | 368.8 | 238.3 |
| 2019q3 | 372.1 | 239.6 |
| 2019q4 | 374.1 | 240 |
| 2020q1 | 373.2 | 241 |
| 2020q2 | 386.3 | 253.7 |
| 2020q3 | 392.8 | 248.3 |
| 2020q4 | 389.9 | 248 |
| 2021q1 | 394.5 | 248.4 |
| 2021q2 | 396.3 | 247.7 |
| 2021q3 | 394.9 | 247.5 |
| 2021q4 | 395.8 | 246.1 |
| 2022q1 | 391.6 | 244.3 |
| 2022q2 | 389.4 | 242 |
| 2022q3 | 388.8 | 241.9 |
| 2022q4 | 390.4 | 242.5 |
| 2023q1 | 391.8 | 243.5 |
| 2023q2 | 393.2 | 245.1 |
| 2023q3 | 398.2 | 246 |
| 2023q4 | 400.3 | 247.2 |
| 2024q1 | 400.9 | 247.9 |
| 2024q2 | 403.9 | 248.8 |
| 2024q3 | 406.4 | 250.8 |
| 2024q4 | 407.4 | 251.2 |
| 2025q1 | 406.8 | 251.9 |
| 2025q2 | 410.9 | 253.5 |
| 2025q3 | 414.8 | 253.7 |
| 2025q4 | 417.2 | 254.8 |
Notes: Data are for compensation (wages and benefits) of production/nonsupervisory workers in the private sector and net productivity of the total economy. “Net productivity” is the growth of output of goods and services less depreciation per hour worked.
Source: EPI analysis of unpublished Total Economy Productivity data from Bureau of Labor Statistics (BLS) Labor Productivity and Costs program, wage data from the BLS Current Employment Statistics, BLS Employment Cost Trends, BLS Consumer Price Index, and Bureau of Economic Analysis National Income and Product Accounts.
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