I will never understand how today's industry productivity is the highest it has ever been, yet workers wages/purchasing power hasn't followed, it even got reduced. What the heck is going on?
The upper limit for wages is how much the work produces. The actual wage is determined by how many other people will do the job for less.
This is why when economists say wages are linked to productivity it is true, but only in the same way my cars theoretical top speed limited to the speed of light...
Simple: A lot of the productivity gains of the last decades is thanks to globalization, automation and digitalization - basically, many high-paying manual jobs were eliminated by machines, a lot of lower-paying manual jobs (or environmentally problematic production that would have needed expensive adjustments in the US/EU) was shifted off to China, and digitalization eliminated or vastly improved paper-pusher jobs.
Additionally, the standing of unions went down over time, as a combination of legitimate unions-gone-rogue scandals, anti-union legislation being enacted and union-protection enforcement being reduced.
The result was that the capitalist owner and leadership class enjoyed absurd amounts of net worth gains, and the worker class was left unemployed or with stagnating wages at best. To prove that: CEO payments exploded 940% since 1978, S&P went up 707%, while average worker pay went up only 12% [1] in the same time frame.
You are saying the owners want to pay everyone as little as possible, so why would CEO pay go up? I suspect the reason is more about competing for the best CEOs because of their importance to a company.
People assume that inequality is expensive. It isn't. Income inequality is what a failing society does to motivate people by meeting their greed rather than meeting their needs. An island of concubines is a lot cheaper to give to a CEO than paying 100,000 employees enough for an electric car.
> Income inequality is what a failing society does to motivate people by meeting their greed rather than meeting their needs.
Workers are not greedy for simply needing enough money to rent or own a home! In the same time frame, average US-wide rent has gone up from ~200$ to 1100$ [1] - that's a 450% increase. In "hot" areas such as SF, the development has been even worse [2]. On top of that, other necessities of life such as groceries have also continuously gotten more and more expensive [3], not to mention more expensive to obtain as neighborhood grocery stores closed down in favor of large malls.
We're talking about bare survival here. The costs of living have exploded for decades, while wages have been stagnant. People couldn't set aside money as a result, and now we have over half the US population unable to cover a 1000$ emergency without going into (even more) debt [4]. Wanting more money is not greed in these conditions.
The west defeated the socialist alternative lurking behind the iron curtain and all bargaining power of unions went to hell. Rollback started right after the discovery what a brittle giant the Sovjet Union really was (about 1970s-1980s) and kept going ever since.
Stand alone, with no gun to its head, capitalism auto decays into the neo-feudalism of the guilded age. And alot of the gullible citizenry supported this return to nothing.
Without the politics angle, just adding a new ~two billion poor people to capitalism, over the course of mere ~10 years, will depress wages (imagine US took in a a couple hundred million very poor refugees from Afria and Asia, that are happy to work for half the US minimum wage or less - that's the equivalent of what happened thanks to globalization and free trade). Things might stabilize now, as we enter into de-globalization and the wage levels in Asia will not influence wage levels in the US as much.
As productivity has increased, so has availability of credit. Servicing debt is soaking up our increased productivity. I don't think it's just a coincidence that the FIRE sector has grown so spectacularly.
Because what matters was never productivity but competition. That's inbuilt into the capitalist philosophy. With that, it doesn't really matter that X company's productivity skyrocketed if Y's company, X's competitor, also does. They both will try to grow has much as possible, invest as much as possible in R&D, (...) or they are out-competed by the other.
We should always remember: If a company could, they would have free labour. Expert professional volunteers. That's how a company can maximize their profits. So every single year, every company is, unless forced by laws, wage competition (from other companies) or by force (unions), behind rationalizations, pushing for, unconsciously, getting close to that ideal of free labor.
Also remember that today, free labour has a limit. They can't really pay zero, because people have mortgages, etc. So actually, the modern "zero" is when the workers have zero profit, ie, savings, or even go into constant debt, and have the government pay for it with subsidies.
And this is exactly what we've been seeing the last decades.
All of the profit from increased productivity has gone to the executive caste. None has gone to workers.
Additionally, widespread and unchecked propaganda has brainwashed the public into believing that unions are bad and that the most evil word you can say in public is "socialism".
This is why when economists say wages are linked to productivity it is true, but only in the same way my cars theoretical top speed limited to the speed of light...