If You Earn $50,000 You Should be Making Over $70,000 -- Here's Why


NEW YORK (MainStreet) — American workers are more productive than ever but aren't being rewarded for their efforts, according to a new initiative launched by the Economic Policy Institute, a liberal think tank.

"Between 1979 and 2013, productivity grew eight times faster than median worker pay," the EPI says in a report released in coordination with its "Raising America's Pay" project. "Americans are working harder, more productively, and with more education than ever, but are treading water, as an enormous and ever-increasing share of income growth goes to corporate profits and executive pay."

To illustrate the gap between productivity and pay, an EPI wage calculator takes a current salary and adjusts the annual pay to what it would be had the wage grown with productivity. For example, a $50,000 annual salary should be $73,400 had wages kept pace with productivity over the past 30 years.

"In the three decades following World War II, wages did rise with productivity and living standards improved throughout the income distribution," writes Elise Gould, director of health policy research at EPI. "Since then, however, the rewards to a growing economy over the last three-and-a-half decades have primarily accrued to those at the top (except for the period of tight labor markets in the late 1990s). Since 1979, the workforce is more educated, is working more, and produces more goods and services in every hour worked. And yet the vast majority of workers are not reaping the rewards of their increased productivity."

The EPI analysis reports that American wages were in sync with productivity from 1948 until 1973. But during the period of 1979 to 2013, productivity grew 64.9%, while wages increased just 8.2%. Meanwhile, executive pay saw extraordinary gains during the same period, with the top 1% of earners seeing boosts in pay of 153.6%.

"Despite increasing economy-wide productivity, wages for the vast majority of American workers have either stagnated or declined since 1979, and this weak wage growth extends even to those with a college degree," the report says.

—Written by Hal M. Bundrick for MainStreet

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