Have workers’ wages risen or fallen since the 1970s? This is the question posed to me on Ask.fm:
“The left likes to throw the “real wages have depreciated greatly since the 1970s” argument around a lot. What would you say to this article that sets out to debunk that?”
The questioner offered a paper by the bourgeois simpleton economist, James Sherk, Productivity and Compensation: Growing Together, as a refutation of the dominant Left opinion that wages have depreciated greatly since the 1970s. Sherk argues:
“Conventional wisdom holds that worker productivity has risen sharply since the 1970s while worker compensation has stagnated. This belief rests on misinterpreted economic data. Accurate and careful comparisons show that over the past 40 years measured productivity has increased 100 percent and average compensation has risen 77 percent. Inflated productivity measurements account for most of the remaining 23 percentage point difference. An apples-to-apples comparison shows that employee compensation continues to closely follow productivity. American workers continue to earn more as they become more productive. To help Americans advance economically, policymakers should seek policies that will increase productivity.”
To be sure, the argument made by James Sherk is not entirely silly. It even has some support among a small group of Marxist labor theorists. The Marxist scholar, Andrew Kliman, has written a book, The Failure of Capitalist Production: Underlying Causes of the Great Recession, making the very controversial assertion that total compensation paid for labor power, including non-cash benefits, have more or less not fallen since the 1970s.
However, what no one disputes, at least so far as I have read, is that real wages have fallen during this period; in fact, even Sherk admits wages have fallen over the period by 7 percent. Instead the author examines another, perhaps related, question: has total compensation for workers increased since the 1970s as the productivity of labor has increased? Read the rest of this entry »