It has a finger on the long term trend of decreasing relevance for labor and increasing relevance for capital as factors of production, but it's certainly not a metric I'd choose and that's why I tried so hard to steer towards something better.
One can imagine a world where productivity increases, the need for old jobs is reduced, but newer, better jobs more than replace them because the economy is experiencing genuine growth. Self-serving capital rhetoric will push you to always imagine it this way, self-serving labor rhetoric will push you to never imagine it this way, but good policy lies in figuring out what's actually happening in aggregate and responding accordingly (the framing I tried to push).
It's not productivity itself; it's the decoupling of productivity from wages. If I'm creating 3 times as much value as my equivalent in 1970, why aren't I getting paid 3 times as much inflation-adjusted money, hmm? It's not even unfair to shareholders - they'd also get 3 times as much as in 1970. But instead they get 10 times as much and I get 0.7 times as much, or something like that. What's the deal?
> If I'm creating 3 times as much value as my equivalent in 1970, why aren't I getting paid 3 times as much inflation-adjusted money, hmm?
Because that increase in productivity comes almost entirely from technology owned by your employer.
To look at it in a contrived example, let's take textiles. There is a textile factory employing weavers who weave fabric by hand, and the factory owners buys a new automated weaving machine that makes the weavers each 3 times more productive. The maker of the machine created the technology, and is paid for it, the owner of the factory made the investment to bring the technology, and profits from it.
This is basically exactly what has happened to modern productivity.
Except in technology where the gains come from my personal investment in skills. I'm spending hours every week keeping up with the field of software engineering. I've been investing in learning my craft since I was 14 or so.
I'd argue the same goes for many types of digital creators, artists, video editors, animators, and so forth.
> Except in technology where the gains come from my personal investment in skills.
Not really. That's essentially a weaver learning to use the new automated weaving machine. That is what you do to remain qualified for the job. Now, if you were a framework or key system creator, building the underlying platforms that get adopted throughout the industry, I would agree. But just learning to use the tooling the the industry creates isn't that different, other than the rate of change you have to keep up with.
No it’s not. If the increased productivity is realized by multiple industries, then they all compete on price and the price of their goods comes down. That means the consumers of the product capture the gains in productivity.
Farmers using machinery instead of labor has meant cheaper food for everyone, not rich farmers.
I think that if we look at inflation-adjusted productivity, and inflation-adjusted average income, then that would indeed prove increasing inequality, right?
I believe the chart in this link is adjusted by inflation. Showing overall the same trend: