Daily Archives: April 29, 2012

When I took economics 101 in college one of the things we were taught was that over… 1

When I took economics 101 in college one of the things we were taught was that over time, incomes could rise without triggering inflation as long as the increase was tied to improved productivity. Since the industrial revolution productivity has improved at the highest rate in all of human history and even more so in the last four decades.

A not so funny thing has happened since the 1970s (which just happens to coincide with the rise of the political right in America). While productivity in America has climbed by over 80 percent since 1973, average hourly compensation has only gone up about 39%.

The difference between the increase in productivity (and the lower costs it brings) and compensation has gone largely to corporate profits. However, if you look even closer at the data, you see something even scarier. The disparity between productivity and compensation wouldn't be so bad if it was distributed evenly across the working population. However, as anyone in the 99% knows, this has not been the case.

In the graph presented by Paul Krugman, note the difference between average hourly compensation and median compensation. The average comes from dividing the sum total compensation by the population. The median is the point at which half the population is above that point, and the other half below. With a comparatively even bell-curve distribution, the average and median would be fairly close together.

However, the median compensation over the last 40 years has only gone up by 10.7%, barely one-quarter of the average increase. What that means is that a relatively small proportion of the population has seen its compensation rise by much, much, much more than 40% (something on the order of several hundred percent) while the vast majority of Americans have seen virtually no movement in their income over the last 4 decades. That is why we now have the largest disparity in incomes in America in our history and the middle class is quickly moving toward extinction.

That is what the policies of Republicans have wrought on America.
#politics #incomeinequality

Reshared post from +Jeff Jarvis

Krugman: Where productivity value went (to inequality).

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Where The Productivity Went
It's two-thirds the inequality, stupid.

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