• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Kentucky Center for Economic Policy

Kentucky Center for Economic Policy

      

  • About Us
  • Press Room
  • Donate
  • UnlockKY

Research That Works for Kentucky

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Types
    • News
    • Op-Ed
    • Research

      

  • About Us
  • Press Room
  • Donate
  • UnlockKY

Copyright © 2023 KyPolicy Privacy Policy Terms & Conditions Sitemap

Analysis

Key Mechanism for Growing Middle Class in Kentucky Is Still Broken

Anna Baumann | November 2, 2016

Wages for Kentucky workers finally grew last year, suggesting both a tightening labor market and pointing to strong recent growth in manufacturing and health care jobs, among other industries. But one year of good news doesn’t change the fact that the gains from economic growth are not being shared equitably with Kentucky workers.

Four decades’ worth of data show a long-term trend in which Kentucky workers’ paychecks are lagging behind growth in productivity, or the value of our economy’s output per hour of work. Between 1979 and 2015, typical Kentucky workers (median production/nonsupervisory workers) saw their real wages grow by 10.1 percent, while productivity grew by more than four times that rate at 41.6 percent.wages-1

More On Economic Security: Tracking SNAP in Kentucky

Source: EPI analysis of unpublished total economy data from Bureau of Labor Statistics, Labor Productivity and costs program; employment data from Bureau of Labor Statistics, Local Area Unemployment Statistics; wage data from the Current Population Survey and compensation data from the Bureau of Economic Analysis, State/National Income and Product Accounts public data series.

Ideally, growth in the value of what we produce and what workers make shouldn’t be all that different: besides providing a fair and consistent share of economy-wide gains to the people whose labor helps grow the economy, pay rising in tandem with productivity supports a higher quality of life for a growing middle class. A larger middle class, in turn, generates more consumer demand. In other words, compensation growing in line with productivity is good for workers, their families and the economy.

(The opposite is true as well: when workers’ paychecks shrink relative to the wealth they’re helping create and the middle class contracts, families’ quality of life goes down and the economy suffers from lagging demand.)

It’s been decades since a virtuous relationship between productivity and compensation gave more Americans a fairer shot at climbing the economic ladder. Since the relationship broke in the early 1970’s nationally, compensation has grown by just 9.2 percent while productivity has gone up by 72.2 percent.

wages-2

So where is the growth going that once went into typical workers’ paychecks? A rising share goes to owners and shareholders. Furthermore, there is an increasingly unequal distribution for workers across the wage and salary scale, meaning a few at the top are getting a lot more, and everyone else is being left behind. Income data, which capture not just wages and salaries but investment income as well, show that between 1979 and 2013 the top one percent in Kentucky saw their real income grow by 60.1 percent, while for everyone else it dropped 2.6 percent.

Growing inequality of wages and income is not coincidental. Policy action and inaction has decoupled compensation for average workers from productivity through a number of channels: declining unionization; eroding minimum wage and overtime protections (the latter of which will be updated in December); failure to provide workers paid sick and family leave; failure to end discriminatory and abusive employment practices; trade policies that eliminate middle class jobs while benefiting Wall Street interests and the abandonment of policies pursuing full employment, for instance. As the national conversation continues to shift toward building an economy that works for everyone, it will be important that state and federal lawmakers keep these policy issues in mind.

Print Friendly, PDF & Email

FacebookTweetLinkedInEmail

Primary Sidebar

Get KyPolicy news updates in your inbox

Sign Up

Sidebar

Perspectives

The Legislature’s Transportation Budget Cuts Contributed to the JCPS Bus Debacle

Workers at Kentucky’s Largest Employer Could Soon Be On Strike. Here’s What It Means

A Child Care Apocalypse Is Coming

Don’t Hold Our Best Tool for Fighting Hunger as a Political Hostage

The School Year Will Soon End, but a New Strategy to Dismantle Public Education Is Just Beginning

Other Economic Security Items

Analysis

Tracking SNAP in Kentucky

debt deal snap work requirements

Analysis

13,000 Older Kentuckians Face Increased Hunger After SNAP Changes in Debt Deal

Kentucky workers deserve a raise

Analysis

More Than 17,000 Kentuckians Could Lose Food Aid With Return of SNAP Work Reporting Requirements

Ky. Policy

Footer

Research that works for Kentucky

433 Chestnut Street, Berea, KY 40403

859-756-4605

General information and inquiries: info@kypolicy.org

     

Help us make the facts free and accessible to everyone. That’s how Kentucky will thrive.

Donate

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Work
    • News
    • Op-Ed
    • Research
  • About Us
  • Press Room
  • Contact

Get KyPolicy news updates in your inbox

Sign Up

Copyright © 2023 KyPolicy Privacy Policy Terms & Conditions Sitemap

made by P&P
Share this ArticleLike this article? Email it to a friend!

Email sent!