December 7, 2016
Is There a Mismatch Between Productivity and Workersâ€™ Income?
An article by Lance Selfa, a columnist at the "Socialist Worker", argues that economic growth does not help working people: “One of the orthodox assumptions of both liberal and conservative economics is that a more productive economy leads to higher living standards. According to the theory, when workers are better educated and better trained, and when technology is intelligently deployed to increase economic efficiency, the overall economy produces more and workers earn more. Or so the theory goes. What's the evidence?” In fact, Selfa's argument has been routinely rejected by economists for the following reasons. First, the article ignores the law of diminishing returns. Selfa wrote, The alleged association between the economy's productivity and workers' wages proved true between 1948 and 1973 -- productivity increased by about 97 percent and workers' incomes increased by 91 percent, after accounting for...(Read Full Article)