How wage suppression was caused by policy decisions made on behalf of the rich and corporations

Date: July 29, 2021

The divergence between productivity and the growth of pay for typical workers over the last four decades was no accident.

A loss of $10/hour in the typical worker’s compensation is the result of employers’ successful efforts to keep wage growth down over the past 40 years, as documented by Lawrence Mishel and Josh Bivens in Identifying the Policy Levers Generating Wage Suppression and Wage Inequality. This paper explains why workers’ pay has lagged far behind the growth in productivity over the period from 1979 to 2017. The findings have gotten national attention, including a New York Times article about the paper, “Middle-Class Pay Lost Pace. Is Washington to Blame?

Join us for a webinar featuring leading experts on wage suppression and wage inequality who will delve into the seminal report’s findings and provide proposals on how we can eliminate wage suppression.

The Mishel and Bivens paper and this event is part of EPI’s Unequal Power initiative. The paper provides empirical assessments of specific factors that have caused the divergence between productivity and the growth of the compensation of the typical worker, including excessive unemployment, the erosion of collective bargaining, corporate-driven globalization, weaker labor standards, new employer-imposed contract terms (e.g., noncompetes) and shifts in corporate structures (e.g., fissuring, supply chain dominance).

Issues that will be explored during the webinar include the following:

  • The systemic gender and race discrimination that slots minority and women workers into lesser-paid jobs has also made these workers the primary victims of the systematic weakening of worker power. Consequently, one of the key mechanisms to lessen racial and gender inequities is to restore worker power and to provide everyone access to the best jobs.
  • The issue is not reestablishing “competition” but getting appropriate balance into the labor market.
  • Wage suppression does not result from “slow productivity growth” or a “failed” economy, nor is it the unfortunate result of apolitical market forces that one neither can nor would want to alter, such as technological change and automation.
  • The key dynamic is the strengthening of employers’ power relative to white-collar/blue-collar workers and not that people’s role as consumers suffered from monopolistic prices. Monopolization contributed to wage suppression via impact on squeezing supplier chain wages and profits.

The failure of automation to explain wage suppression represents a failure of competitive labor market analyses that are based on equal bargaining power between employers and employees—since they cannot explain one of the most salient features of the economy over the last four decades. The lessons are simple. Wage growth has been greatly determined by policy decisions and responds—robustly—to big policy changes. But for decades these policy decisions have gone in the wrong direction. Policymakers can deliver prosperity to the vast majority of U.S. workers based on faster wage growth. Whether workers obtain a fair share of the economy’s gains in the future will depend not so much on abstract forces beyond their control but on demanding that their political representatives restore bargaining power to workers, individually and collectively.


Jared Bernstein, Member, Council of Economic Advisers
Lawrence Mishel, Economic Policy Institute
Josh Bivens, Economic Policy Institute
Suresh Naidu, Columbia University
Anna Stansbury, Massachusetts Institute of Technology

Moderator: Naomi Walker, Economic Analysis and Research Network, Economic Policy Institute

When: Thursday, July 29, 2021, 4:00 p.m.–5:30 p.m. ET, 1:00–2:30 PT

Where: YouTube