CONCEPT
Wage Decoupling
The moment—sometime in the 1970s in the United States—when productivity and wages, which had risen together for decades, separated: productivity kept climbing while typical worker wages flattened, and the connection that had made economic growth a broadly shared experience quietly broke.
Wage decoupling is the first and most important of the seven signals
Martin Ford identified as evidence that information technology was doing something structurally different from the automation that preceded it. For most of the postwar era the relationship was reliable enough to look like a law: as American workers produced more per hour, they were paid more per hour. Productivity and median compensation moved together. Then the lines diverged. Productivity continued its historical climb; the wages of the typical worker flattened and, for many categories of worker, declined in real terms. The
fruits of the economy's growing efficiency were still being produced—corporate revenues were real, profits were real—but they were no longer flowing to the people doing the work. This decoupling is not merely an economic data point. It is the structural signature of an economy in which
the returns to automation are captured by capital rather than shared with labor. Ford's argument is that