Mind the Productivity Gap to Reduce Inequality: What's Behind the Numbers?

Tuesday, May 7, 2019
Image credit: 
pedrosek, Shutterstock

What's Behind the Numbers? allows authors to provide additional insight and an explanation into how they arrive at their conclusions. It consists of the data files, calculations, and other materials that inform the analysis but do not traditionally fit into an op-ed.

This is the statistical backup for the statements Edward P. Lazear made in the May 6, 2019 The Wall Street Journal op-ed Mind the Productivity Gap to Reduce Inequality." Click here to see What's Behind the Numbers?.

“Productivity growth among high-wage workers, driven by technological change, is the reason.”
                     

Source: Bureau of Labor Statistics (2019) Labor Productivity and Cost by Industry and Measure, https://www.bls.gov/lpc/tables.htm

Median worker earned around $45,000 and the 90th percentile worker earned around $110,000 in 2017.

The 90/10 ratio rose from 2.2 to 2.4, while the 50/10 ratio stayed flat over the past two decades.
                       

Similar trends in Germany and the UK.
                        


                     

      

The same is true for the average of 16 OECD countries over that period.
    

In both Germany and the UK, the median worker does better relative to the 90th percentile worker than in the US (see above ratios). But the median American worker earns 6% more than the median German worker and 17% more than the British worker.

Median wage      US/Germany 1.06
worker

Median wage      US/UK           1.17
worker

The US has the third highest median wage but is third from the bottom in ratio of median to 90th percentile.
            

Median worker wage growth has been limited to about 1/2 percent per year in the United States, France, and Canada. In Japan, there has been no growth at all.
            

The median German earns 55% of what the German 90th percentile worker earns, while the median American worker earns only 41% of what the 90th percentile American worker earns.

2016
                            Median/90
Germany             0.55096419
United States      0.41322314