The pursuit of economic opportunity for all Americans is as important to the health of the country’s economy as it is to the strength of its democracy. The promise that hard work and determination will yield economic success is a central American ideal, but it has been called into question as secular economic forces and institutional changes have reshaped the American economy and had an uneven impact on Americans’ ability to prosper.
In this chapter, author Michael R. Strain first discusses the wage-setting process and the conceptual issues that are of critical importance to any empirical investigation of the link between compensation and productivity. He then highlights some recent evidence suggesting that, contrary to the current narrative in some policy circles, the link between productivity and wages is strong.
MICHAEL R. STRAIN is Director of Economic Policy Studies and Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. An economist, Dr. Strain’s research focuses on labor economics, public finance, and social policy, and his papers have been published in academic and policy journals. He is the author of the recently published […]