Economic inequality in the United States is real and deeply damaging to the living standards of the vast majority of families. But it’s eminently fixable so long as we’re willing to make a pronounced break with policies of the past to make income growth a genuine political priority.
The roots of inequality’s rise after 1979 are in U.S. labor markets, particularly in the failure of paychecks for most workers to rise in line with broader measures of economic growth .
Take one relevant measure of overall growth — growth in productivity, or the average amount of income generated in an hour of work. Between 1979 and 2018, productivity rose by 70%. But median wages rose by just 14%. Including non-wage benefit growth would nudge up this number, but it would still be far less than half the growth of productivity.
This wedge between economic growth and paychecks is driven by inequality, and the inequality in turn is driven by policy decisions.
The most obvious example: In the first 30 years that the federal minimum wage existed (between 1938 and 1968), Congress frequently increased its value to keep pace with economy-wide productivity . As the overall economy grew, the minimum wage increased.
But the high-water […]
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