Over the last three years, real wage growth has been about 0.7 percentage points slower than it was during the boom years of 1998 through 2001. Jason Furman makes a convincing case that the explanation doesn’t lie with rising inequality or corporate profits. The key factor is productivity.
Productivity growth has slowed dramatically in recent years in the United States and almost all other advanced economies as well. Productivity growth was spectacular in the late 1990s, rising at 3 percent annually. It has been dismal in recent years, rising at only a 0.7 percent annual rate. . . .
This one fact more than explains the 0.7 percentage point slowdown in real wages relative to the late 1990s or the slightly smaller 0.5 percentage point slowdown in median wages since then.