Our views on business, society, and the news of the day.
Chart of the Week: Wages as a Share of GDP
One thing we like to emphasize here at the Hitachi Foundation is that it's the long-term outlook that matters. Nothing could illustrate that more crisply than this chart, which shows how wages in the US have changed relative to gross domestic product over the last 70 years.
It's not a good trend - as a percentage of GDP, wages have decreased nine percentage points since their peak in 1970. It's made even worse by the fact that net worth for families in the lowest three quintiles have stagnated or shrunk as a percentage of GDP over the same time horizon. A lot of this can be attributed to factors such as globalization and automation, of course, that have raised living standards in poorer countries even though they've been problematic in developed nations. Part of it can also be attributed to spiraling healthcare costs - a separate but related problem that we're also trying to figure out.
But most of it, in our opinion, is caused by the simple fact that low-to-medium skill jobs just aren't valued as much as they used to be. And we're not making up the difference by improving education and skill levels. But we do think there's an answer - and it can be found in the examples of our Pioneer Employer Initiative. More on that in the weeks to come.