Yesterday the media got to run its latest monthly ritual; reporting on the US inflation data that, once again, hit a new high — this time with consumer prices rising 8.5% relative to this time last year.
Productivity vs. wages
Inflation is sort of just one side of the economic story for workers, the other of course being wages. Without matching pay rises, wages fall in real terms — which is likely to contribute to a further widening of the "productivity-pay-gap", the gap between output and pay that's been growing for decades.
Indeed, according to data from the US Bureau of Labor Statistics, the amount of "stuff" produced by a typical worker in the US per hour (what an economist would call productivity) has gone up roughly 127% since 1975, but the real compensation of workers has only gone up by around half of that amount (63%). That's a far cry from the 1947-1975 period, when those two variables moved almost in lockstep.
Advances in technology, globalization, government policy and many, many more variables have all contributed to the share of income going to labor decreasing — and soaring inflation isn't going to help.
