domingo, 19 de julio de 2015

Wage growth and productivity: the US experience

Increasing productivity is the key to raising wages -- at least, it's supposed to be. A very informative graph published in the July 17 New York Times (see the link: suggests that the longstanding relationship has fallen by the wayside. Since the 1970's, wages have stagnated in spite of rising productivity.

At the same time, economic research comparing what happens when a state raises the minimum wage and its neighbor doesn't has demonstrated that raising the minimum wage doesn't have to mean fewer jobs. It appears that the direct effect of higher labor costs is offset by better morale, reduced turnover and increased productivity...