How we got here · Work & wages
Why didn’t wages keep up with productivity?
Unions, globalization, productivity, and pay
Timeline · newest first
2020sEvent
Pandemic labor shock, then a cooling
COVID reshuffles who has bargaining power: essential vs. remote work, quit rates spike, then hiring cools and real wage gains slow. Gig platforms keep growing as a parallel labor market.
2000sPolicy
China PNTR and the “China shock”
Permanent Normal Trade Relations with China and deeper global supply chains accelerate manufacturing import competition. Some U.S. regions lose factories and middle-wage jobs for a generation.
Nuance Trade is not the only wage story — automation, unions, and industry mix matter too. But concentrated local damage from import competition is well documented.
1994Law
NAFTA era globalization
North American free trade deepens cross-border production. Firms reorganize supply chains; some workers gain from cheaper goods and export jobs, others face plant closures.
1980sEvent
Union density falls; PATCO signals a turn
Private-sector union membership declines for decades. The 1981 PATCO strike firing becomes a political symbol of tougher management and weaker labor leverage.
1979→Market
Productivity keeps rising; typical pay lags
After roughly the late 1970s, economy-wide productivity growth continues while median/typical worker compensation grows more slowly — the famous “decoupling” chart.
Nuance How you measure compensation (benefits, top earners, which workers) changes the size of the gap. The direction of the story is robust; the exact percentage is contested.
1935Law
Wagner Act — modern labor law
The National Labor Relations Act protects most private-sector workers’ right to organize and bargain collectively. Mid-century union density and wage compression follow in many industries.
What people disagree about
- How much of the pay–productivity gap is trade vs. technology vs. weaker unions vs. winner-take-most firms.
- Whether “skills” or “power” better explains who captured the gains.
Where we are now
Your paycheck sits between firm market power, trade and tech, and the legal rules of bargaining. Follow who sets wages in your industry — not just “the economy.”
Open the Power Index →