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We Decide How to Share Gains

Last summer, a respected policy expert from the Brookings Institution spoke at a large meeting. He introduced himself, saying that he works with a lot of brilliant economists who can't understand why the recovery is so slow.

Nobel laureate economist Paul Krugman has an explanation,"...corporations use their growing monopoly power to raise prices without passing the gains on to their employees."

Whoa! There's a shocker. Corporate profits are at historic highs, and workers are not sharing gains.

Economists have an inside joke that says a great deal about our problem: "The winners could compensate the losers." Of course, the whole point of winning is to win! Winners are perfectly content to keep everything, and share nothing with workers, families and communities.

Our slow recovery is the result of policy choices we have made as a country.

For a generation after World War II, prosperity was shared broadly. In the mid-70s, wages abruptly de-coupled from gains in productivity (Figure 1). If workers had continued to share in gains from productivity for the past 40 years, then wages would be at least twice what they are now, adjusted for inflation.

If wages had stayed coupled to productivity, worker income would be double what it is now. See chart below.

figure 1
Read the full blog post that originally appeared on The Huffington Post. Sorscher is a labor representative for the Society of Professional Engineering Employees in Aerospace/IFPTE Local 2001 (SPEEA/IFPTE). Follow Sorscher on Twitter:
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