The sorry truth is that CEOs have not given workers wage increases in line with the productivity gains. Shareholders are benefitting, but not workers. This may not be so bad because if the market keeps moving ahead optimism will rise and job growth and competition for workers might occur.
U.S. Productivity gains in the last 5 years have almost entirely been the result of massive investment in capital goods between 1995 and 2000.
IOW, US productivity is a shining bright spot, not because Fred is toiling away longer, or harder, or faster, but because six Freds were replaced by an automated welding machine that doesn't come to work with a hang-over or call in sick, or because a new materials and purchasing management system has made Fred a lot more productive. As such, you wouldn't expect Fred to get a raise, since he isn't responsible for the increase in productivity. The person who designed and implemented the system, however, probably did get a raise or bonus...and rightly so.
Shareholders are benefitting? lol! Do you own any stock on which you receive a dividend? How's your quarterly check looking? If you're the average shareholder, pretty damned anemic. Even if dividends were strong, and they're not, but if they were -
GOOD! Shareholders are still reeling from the
thousands of dollars they lost in the dot.bomb crash.
How's the value of your stock vs. what you paid for it between 1996~2000? If you're the average shareholder (who invested any significant amount between 1996~2000), pretty damned anemic. It will be a couple more years before many shareholders see the value of their stock surpass what was paid for it, longer if they bought at the peak of the bubble.
Dividends weren't even all that strong during the "Greatest Economy", since company performance was often a feat of creative accounting, not genuine earnings. It wasn't a bounty of dividends that attracted investors, it was the equity (ROI), or the promise of it, whether actual or perceived.
So productivity looks good, but total production is down in manufacturing, for example, and total compensation is more unevenly distributed. Those at the top, however, are making lemonade out of lemons, as it were-
http://www.epinet.org/content.cfm/webfeatures_snapshots_archive_12032003
As to when, or even if that will trickle down to the rest of us remains to be seen...
lol! The only thing the 'Economic Snapshot' proves is that earnings (profits) were well-poised to increase because earnings had been
extremely low, while wages and benefits aren't keeping pace with earnings because they were already
inordinately high, as I explained above.
Wages didn't plummet to negative levels during the recession,
earnings did, while wages have remained stable. Any economist who attempts to correlate wages with corporate earnings in an economic recovery is implicitly confessing his own incompetence or intellectual dishonesty (agenda).
Wages
are not based on earnings and no credible economist would attempt to make this correlation. Wages are based on a number of factors; labor supply and demand, meritous service, length of service, and one factor that nobody has mentioned -
inflation. Inflation has been essentially nill the last few years and the Consumer Price Index actually
declined recently. Why would employees be getting raises when inflation is almost zero?
There is an entity whose income is based on company earnings, they're called "shareholders", not wage earners. One of the
advantages of the wage-earner is that their wages
not be tied to earnings, since earnings rise and fall in cyclical, often unpredictable, fashion. This is the risk born by the
shareholder, not a wage earner.
Employees don't get stiffed when earnings are zero, shareholders do. If wages should change in-step with earnings, it only makes sense that wages should
decrease in-step with earnings, as well. So, if the company posts two quarters of loss, it stands to reason that employees wouldn't be paid for those two quarters, just like shareholders. Or at the least, their wages and benefits would decrease by an amount commensurate with the delta in earnings.
Unless we are suggesting that employees should
always reap the upsides of increased earnings, but
never the downsides of decreased earnings? Again, no competent economist would promote this model because its fantasy.
If someone wants their income to be based on corporate earnings, there is a way to make that happen = start buying stock. If someone wants to be
insulated from the roller coaster like highs and lows of corporate earnings, there is a way to do that - fill out an employment application.
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