Productivity and the Great Recession

Derek Thompson:

Here's what we thought we knew. In the last three decades, gross domestic product doubled but the typical worker's real wages barely increased. For those with only a high school degree, salaries fell slightly. Some economists called this period of lazy wage growth the "Great Stagnation."
It turns out that "stagnation" was too optimistic.

In fact, real wages for middle class men have declined by 28 percent since 1969, according to a report from the Hamilton Project. For men without a high school degree, they've fallen by a whopping 66 percent. "Stagnation is too weak a word," said Michael Greenstone, author of the report. "This is decline."

"The decline in earnings shakes the core of the American Dream."

Economists got it wrong, Greenstone said, because they compared wages among all working men rather than among all "working-age" men. That distinction is key, because fewer and fewer working-age men are actually working. Since 2009, one in five has been idle. When you factor in millions of men without weekly salaries, male wages sink to their lowest level since the 1950s.
"This decline in the earnings opportunities for men has had profound influences on American society," Greenstone said. "It upends families. It increases our demands from government, even as it increases our aversion to taxes and our distrust of government. It shakes the very core of the American Dream."
This finding has deep implications. It means that wages have been falling since before the credit crisis, the housing bubble, the Bush tax cuts, the Clinton boom, the wave of deregulation, the Reagan recovery, and the Nixon years. Something older and bigger than all of these things is at work. Before the Great Recession, there was a greater recession for the American worker. And its origin might surprise you.

ALL ABOUT PRODUCTIVITY
(or: If We're Working Less, Who's Working More?)

I think this is a very big part of our problem.  We have to completely rethink employment and work, and determine how we can fully employ workers.  Computers have revolutionized the workplace, and we are just now dealing with a lot of the consequences.  Take my field of civil engineering.  In the early 90s, companies were just moving to CAD programs.  The amount and quality of design work rapidly improved.  No longer were street layouts done by hand.  A software application could lay out the street and allow an engineer to review and revise it in minutes, not days.  Hand drafting was a thing of the past.  But there was no major decrease in employment, that I know of.  The design work continued to cost the client a similar percentage of the cost of construction.  So the difference went toward software and company profits.  When things got tough, jobs were shed.  They aren't coming back very soon.  The productivity gain was already built in, and now there just aren't the number of projects there were then.  How do we adjust to that?  The same thing happened to machinists, welders, assembly workers and a number of other fields. 

As the article notes later on, we are the world's third largest agricultural nation, even though only 2 percent of us farm.  What is everybody going to do for a living?  I don't know, but that is a real business uncertainty.