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December 10, 2013

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Jackart

My guess is that once the huge changes to the economy work their way through the system, the steady rise in wages will resume its upward path. I can't say how, but it always has in the past, and I have a tendency to disregard anyone saying "it's different this time". This is as true for good news as bad.

But, but, but *reasons*

Yes. But the economy is FAR more complicated than any reason that can be captured in official statistics.

Luis Enrique

umm, unless I am missing something the explanation you stress - productivity slow down - still requires some combination of the explanations you say won't do, to be true.

ah - what I might be missing is that your chart doesn't show GDP per worker.

Otherwise, I was thinking, if it was just productivity falling then there wouldn't be a disconnect between GDP per worker and income per worker. A disconnect requires either distributional changes (so median departs from mean) or some other wedge (taxes, profit share). Absent such things, a productivity slow down would cause GDP per worker and median income to move in tandem.

Luis Enrique

sloppy, I meant "wouldn't be a disconnect between GDP per worker and median income"

chris

@ Jackart - I'm saying it's different now because it has been different. Granted, things might change. But what if a mix of secular stagnation, job polarization hitting the median and continued low wage competition from the far east do continue to depress the bottom half of wages? The idea that things'll be OK in the long-run seems a bit Stalinist to me.
@ Luis: GDP per worker has fallen since the mid-00s:
http://www.ons.gov.uk/ons/datasets-and-tables/data-selector.html?cdid=A4YM&dataset=prdy&table-id=1
This has been exacerbated by job polarization, which has favoured upper deciles over the median.

andrew

You seem to be struggling for an answer.

What about raising the educational standard - not just children (that will take ~16 years to work through), but everyone.

i.e. v.v. big subsidies for anyone who wants to learn anything.
If there really is a lot of hidden unemployment, there wont be a big impact on companies.

Staberinde

Might there also be a demographic factor in this?

Anecdotally, I'm told that Generation Xers are in short supply. Apparently people my age (38) should be managing and running things and leading things because that's what Boomers did at my age. However, it seems there aren't as many of us around to do this as there were Boomers, so those better paid managerial jobs are effectively hoarded by older cohorts or distributed to younger cohorts at cheaper cost.

So perhaps one reason why the middle is getting less is because there's less of a middle age cohort to get as much?

SK

Perhaps we should reduce taxes on income and instead increase taxes on wealth which are currently much lower than the income ones.

A

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