Brokedown Engine

I have severely mixed feelings about Clive Crooks’s latest column at Bloomberg, at its core elaborate apologetics for two decades (at least) of bad policy. After redefining the problem several times he arrives at the conclusion that maybe wages haven’t lagged productivity that much after all:

For decades after 1970 — contrary to one popular account — labor incomes grew roughly in line with productivity. Over the long haul, far from being irrelevant to well-being, growth in productivity goes far to deciding how poor or prosperous ordinary Americans will be.

However, at the end of his analysis there’s still a gap of about 10% between the increase in productivity and wages.

I think that one of the explanations behind what’s happened over the last 30 years or so is the enormous growth of the financial, healthcare, and education sectors, all of which have had great run-ups in wages, none of which employ a vast number of Americans, and none of which, arguably, have seen much in the way of increases in productivity. Certainly nothing commensurate with the degree to which the increase in wages in those sector have outstripped wage growth in other sectors of the economy.

I guess I shouldn’t be too concerned. Quietly and surreptitiously all of those sectors are or will be disrupted. I won’t be surprised if the 21st century equivalent of manning the barricades isn’t fighting against the holding action defending obsolete business models.