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Date: 2024-06-22 Page is: DBtxt003.php L0900-PE-US-Productivity-v-Wages-diverging
US Productivity and Wages Diverging
Why has US hourly compensation flat­lined for nearly 50 years?
There are many different versions of the graph above that have been included in a flood of reports about economic performance. They are all pretty clear about the reality that wage earners have not shared very much in the benefits of improved productivity during the period from the 1970s to the present, while during the period from the end of the Second World War until the 1970s productivity and hourly compensation improved together.
The US economy had a massive shock in 1973 when the OPEC oil cartel was able to increase the price of oil from $3.50 a barrel to $13.50 a barrel. This changed everything.
In retrospect, one has to wonder how it was that OPEC succeeded in imposing its will on the global oil industry, and it is likely that many important actors stayed quiet because it was in their interest for oil prices to go up. The Netherlands and the UK got advantage from the OPEC price increases as did all the major integrated international oil companies. Consumers everywhere got to pay the price ... not to mention wage earning workers!
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