Like Canada, growth in U.S. economy not going to workers

As the Ontario Tories gear up to take a run at suppressing the wages of working people north of the border through attacks on unions, defined benefit pension plans and overall public sector compensation, the U.S. Economic Policy Institute shows how dramatic the difference has been between wage and economic growth in that country over a period of nearly 40 years. Clearly, it hasn’t been workers who have been reaping the benefits.

The data shows that during the period 1973 to 2011 the U.S. economy grew in real terms by 80 per cent, but the median worker only took home 4 per cent of that growth in the form of real hourly wages. Total compensation — wages and benefits — grew by 10.7 per cent.

What wage growth there has been is very unequal in distribution.

While those in the top 5 per cent saw real wages grow by 34.1 per cent, those in the bottom 10 per cent would have only realized a 1.1 per cent difference.

If you separate out the modest gains made by working women during this period, real wages for men actually declined for the bottom 60 per cent.

For the most recent period, from 2007-2011 most workers – the bottom 70 per cent – saw real declines in their wages, while those in the top 30 per cent saw modest gains. The top 5 per cent of U.S. workers saw real growth of 2.4 per cent over the recent five-year period.

Real growth represents gains made over and above the rate of inflation.

The rate of inequality is actually growing faster in Canada than in the United States, although levels of inequality remain slightly higher south of the border. There are likely more similarities that differences between workers’ status in the two countries, raising the question why the Tories are pushing an agenda that would see workers’ share of economic growth decline further?

To view an interactive infographic on the issue, click here.

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