The Fruits Of One's Labor

The Fruits Of One's Labor
Max B. Sawicky
May 13, 2005

Max B. Sawicky is an economist at the Economic Policy Institute. He would like to acknowledge the helpful comments of Lee Price, EPI Research Director.

The economy has not been much of a story lately. Cassandra-like voices warn of ominous, unsustainable trends in budget and trade deficits, but the public doesn't get very excited because no painful consequences have reared their ugly heads. Yet. More prominent is the jobs situation, which to the man on the street may seem to have righted itself. The latest report of the Bureau of Labor Statistics shows an addition of 274,000 jobs in April, a good number. Regardless of whether or not you think the president's tax cuts worked, the economy is growing. So how good is it for you?

As usual, it depends on where you sit. The standard of living for most working-age people depends on their rate of return on hours worked. Economists say workers' compensation (wages plus fringe benefits, chiefly health insurance) depends on productivity, usually measured as total output per hour worked. The more workers produce, the more bosses will pay. But economists can be wrong, and this is one of those times. With rising productivity bosses can pay more, but will they pay more? Do they pay more?