Hot topic these days is how wages have remained stagnant for a long, long time … while productivity – think output per labor-hour has soared.
The political explanation: over-sized paychecks to greedy CEO’s have been draining the coffers.
That may be a part of the answer, but I bet it’s statistically insignificant.
I haven’t run the nums, but I bet that zeroing all CEO compensation wouldn’t budge the below chart.
In addition to greedy CEO’s, the batch of suspects usually includes: automation (shifting jobs to machines & computers), globalization (moving jobs to low wage areas), immigration (an influx of cheap labor).
In other words, the supply of labor and the demand for labor are out of whack.
OK, I get that.
But nobody seems to ever mention a pretty obvious bump in the supply of labor ….
You guessed it: women.
Since 1970 – the inflection point on most of the charts — labor force participation rate among women increased 22.5 percentage points … a 65% increase.
In round numbers, employment among women increased by almost 40 million.
And, the mix of men and women employed has shifted.
In 1970, women made up about 1/3 of the employment market.
Now, women account for about half.
Note how this chart mirrors the one above.
One might conclude that as women entrants swelled the labor market, wages got pressured.
It’s simple supply and demand.
And, as the labor mix shifted to proportionately more women, productivity went up.
That makes perfect sense to me.