by Jordan Green

Monitoring the economic pulse of the Triad | by Jordan Green

Report says productivity gains have not been matched by wage increases

A new study by the Budget & Tax Center at the liberalleaning NC Justice Center in Raleigh finds that increases productivity among North Carolina workers since the recession bottomed out in June 2009 have not been matched by wage gains, and in fact for the first time since World War II wages have actually fallen despite positive productivity growth during a recovery. The report finds that productivity increased 1.5 percent while wages dropped by 4.2 percent. In contrast, the recoveries following the 1990 and 2001 recessions saw wages rise with productivity.

“Unlike in previous recoveries, productivity gains after the Great Recession have been transferred to capital income distributed to shareholders from corporate profits, rather than going to increased wages or new-job creation,” writes Allan M. Freyer, the author of the report. “As job creation has lagged amidst continuing high unemployment, the growing pool of jobless people in search of work has only increased competition for scarce jobs and served to drive wages down even further — more than 4 percent since the end of the recession in 2009.”

Freyer said the productivity gap also dovetails with a rise in wage inequality and the emergence of a two-tier labor market, as middle-wage manufacturing jobs continue to be off-shored.

“Many workers who once labored in middle-wage jobs are increasingly shunted into fast-growing low-wage and low-skill occupations, including food preparation (which pays $8.27 an hour), home health aides ($9.73 an hour) and cashiers ($8.50 an hour),” Freyer writes. “At the same time, the state is seeing growth in high-wage and highskill occupations like nurses, physicians, office managers [and] post-secondary teachers, which pay between $22.01 and $41.12, and require significant training and education.” The report recommends that the state invest in workforce development programs capable of preparing workers for jobs in high-growth and high-wage industries, including career pathway programs that help people land jobs and advance in skill-demanding occupations.