Economists argue that policy is hindering the growth of middle-class wages.

Economists argue that policy is hindering the growth of middle-class wages.
Economists argue that policy is hindering the growth of middle-class wages.

From 1979 to 2024, productivity in the U.S. increased by 80.9%, while hourly wages only rose by 29.4%, according to a study by the Economic Policy Institute.

Some economists have proposed that deliberate policy decisions have been the cause of workers' wage growth being suppressed, rather than wage stagnation being a persistent trend.

One reason might be the unreasonably high rate of unemployment in the U.S.

"According to Josh Bivens, the chief economist at the Economic Policy Institute, the natural rate of unemployment is the lowest level of unemployment that won't cause inflation."

Since 1979, the U.S. has spent more time with actual unemployment above the estimated natural rate of 4.5% to 5.5% as per the Federal Reserve Bank of San Francisco.

During times of low unemployment, wages tend to increase at a faster rate for the American middle-class, resulting in real-world consequences.

"According to Bivens, the most effective negotiating tool for employees seeking wage increases is to threaten to leave their current job unless they receive a higher salary. However, this tactic is not reliable when unemployment rates are high."

Watch the video above to find out how middle-class wages are being suppressed.

by Juhohn Lee

Markets