Did middle-class incomes really decouple from overall economic growth in the mid-70s? If you look at median family income vs. GDP per capita, the answer is yes. From 1950 through 1975, both grew at about the same rate. After that, median family income grew quite a bit slower than GDP per capita.
Here is the graph:
income for the middle class has stagnated over the last 30 years, while income for the top have continued to grow.
But overall productivity has not changed at all. So what could be the reason for why the amount of GDP produced per person has not shifted at all when people are making much less money?
I imagine technology has a lot to do with it. If 5 people could produce X but now 5 people can produce 5X, then we would see something similar. Productivity going up but no change in income.
Or look at it another way, what once took 5 people can now be done by 1. What do those other 4 people do?
In a strong economy, there may be jobs for many of those people but eventually the increasing productivity due to technology filters down and remakes those jobs. Where do people go then?
Continuing the trend, we would eventually have everything being done by just a few people and the rest would not have anything to do. No job and no income.
One of the hallmarks of the industrial revolution is that it made agriculture more productive, meaning that many farm jobs disappeared. Rural workers came to the cities to get industrial age jobs, where there was a huge need.
But in the Information Age, there really does not appear to be an excess of jobs available for the average person.
We can imagine a world where a very few work very hard and the rest have nothing. Productivity still goes up but fewer and fewer people have the money to buy things.
He accomplished this by pushing a button 1 hour a week!
That could work. Reducing the work week but keeping overall wages the same would result keep productivity the same but work to increase wages.
Perhaps what technology is driving us to is a time where either a few people do a lot of work and the rest are unpaid, or one where a lot of people do a little work and all are paid.
I wonder if that sort of economy is even possible? We may have to find out because it is impossible to have a stable economy if a few get paid and most do not.