Output Up, Profits Up, But Wages Lag

Dayton Daily News - September 3, 2006

Critics say there should be a better distribution of the economic ‘pie.’
By Jim DeBrosse

Dayton Daily News

If you’ve been working harder for a paycheck that stretches less and less from week to week, you have lots of company these days, economists say.

Wages for every level but the top 10 percent of paid employees in both Ohio and the nation have stagnated or declined since 2001, even though worker productivity and corporate profits have climbed, according to a report released today by Policy Matters Ohio, a nonprofit, nonpartisan policy research institute founded five years ago with support from organized labor.

Wages and salaries make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, economists say, while profits and productivity are setting records not seen since the 1960s.

Hourly output per worker jumped by 3.3 percent a year from 2000 to 2005, up from 1.4 percent from the mid-1970s to the mid-1990s, Policy Matters Ohio reports. Likewise, from 2000 to 2005, inflation-adjusted corporate profits rose by 50 percent, from $621.6 million to $931.4 million.

“For the entire post-war period, we had a growing (economic) pie in this country that was more evenly distributed,” said Amy Hanauer, executive director of Policy Matters Ohio. “We shouldn’t accept the idea that a very, very narrow group of people should see most of the benefit.”

Hanauer is the author of The State of Working Ohio 2006, a 40-page analysis of Labor Department and Census data. A similar national report also was released today by the Economic Policy Institute, a liberal research group in Washington.

Dayton-area residents like Jeff and Laura Shawhan of Kettering don’t need reports to tell them they’re feeling pinched. Shawhan, an electrician for a local auto parts supplier, has received 2 percent raises in each of the last three years while his gasoline, home heating and medical bills have grown by double digits. “The attitude today is the rich get richer and the poor get poorer,” he said.

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