Many explanations have been offered for the growing inequality of income, from globalization, to the technology revolution, to differences in education.
But a new paper from the
Economic Policy Institute, a liberal think tank, says government policy is to blame.
"Key economic evidence implicates policy decisions, and particularly changes in labor market policies and business practices, as more important in explaining the slowdown in hourly wages for the vast majority than many commonly accepted explanations," wrote the paper's authors.
Editor’s Note: Retire 10 Years Earlier With These 4 Stocks
They are Josh Bivens, Elise Gould, Lawrence Mishel and Heidi Shierholz, all of whom work at the Institute.
From 1948 to 1979, hourly wages and productivity both increased by about 100 percent. But from 1979 to 2013, productivity gained 65 percent while average compensation for non-management workers advanced only 8 percent, according to the study.
The authors say one problem is the fact that the minimum wage hasn't been increased in line with inflation. The inflation-adjusted spending power of the federal minimum wage, now $7.25, has dropped to its lowest point since the 1960s, the study says.
In addition, the Federal Reserve has aimed more at controlling inflation than boosting employment, the authors argue.
John Steele Gordon, author of "An Empire of Wealth: The Epic History of American Economic Power," sees things differently.
The recent growth of wealth at the top of the totem pole is "simply the inevitable result of an extraordinary technological innovation, the microprocessor, which Intel brought to market in 1971," he writes in The Wall Street Journal.
"Seven of the 10 largest fortunes in America today were built on this technology."
Editor’s Note: Retire 10 Years Earlier With These 4 Stocks
© 2025 Newsmax Finance. All rights reserved.