You bring up a good point, but the reasons for that are not directly related to productivity. 2 big ones:
1. money supply. Average wage and population have both increased. How can that be possible if the total amount of money in the economy is fixed? Well it's not. Increases in money supply are slightly more than productivity growth rate in order to prevent deflation, and they err on the side inflation. There's literally more money in the economy than ever before.
2. monopolies. Healthcare & education & housing are not competitive markets. You can't invent more land. Healthcare is a basketcase. And schools are in effect a luxury good where exclusivity is the main product.
You combine #1 and #2 and you get what you expect.
The solution to this is not to increase minimum wage with productivity. That doesn't make sense.
IMO minimum wage should be pegged at some standard of living in a 50th percentile cost of living suburb.
randyrand|4 years ago
1. money supply. Average wage and population have both increased. How can that be possible if the total amount of money in the economy is fixed? Well it's not. Increases in money supply are slightly more than productivity growth rate in order to prevent deflation, and they err on the side inflation. There's literally more money in the economy than ever before.
2. monopolies. Healthcare & education & housing are not competitive markets. You can't invent more land. Healthcare is a basketcase. And schools are in effect a luxury good where exclusivity is the main product.
You combine #1 and #2 and you get what you expect.
The solution to this is not to increase minimum wage with productivity. That doesn't make sense.
IMO minimum wage should be pegged at some standard of living in a 50th percentile cost of living suburb.