Up until about 20 years ago wages were pretty much in line with productivity and increased each year , then all of a sudden wages stopped increasing yet business was able to produce more and prices for goods increased. Basically business benefited while the workers got shafted. I think that has to do with the economic problems more than anything else. People had to borrow to buy the same things they had before because wages lost pace with cost.
So what caused it to occur ? I heard some people say it was computers and automation that allowed factories to turn out more and need less skilled workers so there was no need to increase wages.
Answer:
Global Labor Arbitrage
Basically, when the supply of labor--caused by foreign outsourcing, H-1B and L-1 visas, and mass immigration--increases relative to the amount of capital available and/or the demand for labor, wages, the price point, must decrease.
This means that because there are more laborers in the market relative to the amount of resources and wealth-producing machinery that employers--business owners--can keep a larger percentage of a worker's contribution to the act of wealth creation as profit. In other words--because lots of people are willing to work for less, workers receive a smaller share of the pie. This is also sometimes known as a "Race to the Bottom".
With the collapse of socialism in India and China and the opening of those markets and other markets, literally billions of people were added to the labor force, many of whom are college educated. Since the United States has done nothing to protect its markets, goods and services are being produced overseas for domestic U.S. consumption while foreigners on H-1B and L-1 visas are being imported to work for lower wages, displacing Americans from their jobs. The U.S. also allows mass immigration--both legal and illegal--which places downward pressure on wages for blue collar and low-wage employees.
Now try this experiment in your head. Imagine if there weren't any barriers to the flow of labor or capital and the U.S. economy merged with the economies of India, China, and Mexico, adding over 2.5 billion impoverished people to the U.S. population. What do you think would happen to Americans' standard of living? It would average out with the standards of living in India, China, and Mexico, and since most of those people are impoverished, it means that your average American would end up impoverished.
That is pretty much it in a nutshell.
Since large businesses and the wealthy benefit from what is, in effect, a transfer of wealth from the middle class to the wealthy class, our pathetic politicians, the news media, and our intellectuals, all of whom have been bought and paid for, have refused to mention or in any way acknowledge that Global Labor Arbitrage in any form is a problem. It was discussed a little bit in 2004 during the Kerry campaign but that talk was quickly quieted.
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