US Worker Productivity Is Rising Faster Than Wage Growth

U.S. companies have been getting more out of fewer employees, but those workers aren’t enjoying a corresponding increase in their wages.

Consider the stats: The country’s economic activity is 2.5 percent higher than it was before the last recession, which began in December 2007, but there are 3 million fewer employees today than there were in 2005, according to the conservative D.C.-based American Enterprise Institute.

The left-leaning D.C.-based Economic Policy Institute points out that while the average hourly employee’s productivity increased 80 percent between 1973 and 2011, the median compensation for an hour’s worth of work grew 11 percent.

"A bigger share of what businesses in the U.S. are producing is going to the owners of the firms and the people who lent money to the firm, and a smaller share is going to workers," Gary Burtless, senior fellow in economic studies at The Brookings Institution, told CNN in a report published Thursday.

Up until 1975, wages typically accounted for more than half of the country’s gross domestic product, but in 2012 that share hit a record low 43.5 percent, according to The New York Times.

There are numerous reasons for this widening disparity between the growth of productivity and wages, according to labor economists.

Increased workplace efficiencies certainly play a role as technology allows fewer workers to do more, but this doesn’t tell the whole story. For example, according to a study late last year by the National Employment Law Project, mid-wage occupations were hit hardest but have not come close to recovering their pre-recession levels; they’ve instead been replaced by lower-wage level positions.