Labour's decreasing share of society's wealth

The economy can well afford a raise in the minimum wage. The chart below shows New Brunswick's per-capita gross domestic product (GDP) and minimum wage over the last half century:

Graph of GDP and minimum wage. GDP increases 177 per cent; minimum wage, 49 per cent.

The amount of wealth produced per person per year has vastly outgrown what we pay to our low-wage workers. This is a symptom of two things: 1) increasing income inequality; 2) the decreasing share of produced wealth that is returned to labour as wages.

Nationally, the picture is the same. The chart below is from U of T economist James Uguccioni. In Canada, labour productivity – the amount of goods and services produced in the average hour of work – increased 52.5% between 1976 and 2014. But the median wage only rose 3.3%. (Both figures are inflation-adjusted.) Almost all of the gains resulting from technology and improved production methods introduced in this period went to the wealthy. Production-line labour basically receives the same amount of stuff it did in the mid-1970s, despite the fact that it is producing much more.

Graph of labour productivity and median hourly wage.

The gains are especially concentrated at the very top of the income distribution. Not so much the famous "One Percent", but the top 0.1 percent. Economist Kevin Milligan of UBC has figures for the period 1980-2005:

Graphs of incomes of the top percentiles in Canada

The political-economic causes of all this, labour's losses to capital in the last few decades, etc., are discussed in Jordan Brennan, "A shrinking universe: How concentrated corporate power is shaping income inequality in Canada" (CCPA: 2012). Download

 — NK