Forum Post: Who Benefits from Rising Productivity?

Rising productivity creates new wealth. Those who help create wealth should share in its benefits: income, that is, should rise roughly in tandem with productivity, as it did from the end of World War II until the mid-1970s. Then income began to lag. Today, income is falling while productivity is rising. From 2000 to 2010, on average, worker productivity rose 2.6% per year, but median household income fell from $52,500 to $49,777. Poverty ($22,113 for a family of four) rose from 11.3% to 15.1% of U.S. population.

Where did the new wealth created by rising productivity go? From 2000 to 2010, on average, corporate profits rose 8% per year, 29.2% in 2010 alone. Stockholders own corporate profits, either as dividends (increasing their incomes) or retained earnings (raising the value of their stock): in 2007, (latest available data) the wealthiest 10% of Americans owned 93% of U.S. business equity. In 2010, the net worth (what you own minus what you owe) of the Forbes 400 wealthiest Americans totaled $1.37 trillion; the “bottom” 180 million Americans’ total net worth was $1.26 trillion.