Great Graphic: Income, Wages and Productivity

This Great Graphic captures a key economic fact that shapes the political discourse.  Nearly every issue is informed by it.

It was created by a couple progressive think tanks and kudos to Michael Scherer from Swampville a Time blog for popularizing it. 

The social, political and economic implications of this chart are critical.
Yet, I suggest three caveats.

First, household income is misleading because it includes transfer payments (entitlements, which is the basket of goods and services our grandparents on both sides of the political spectrum fought for, as citizens of the largest economy in the world).  Transfer payments have been accounting for an increasing part of household income.

Second, to the extent that wages are an important part of household income, it is highly concentrated as this chart from the Economic Policy Institute illustrates. Lawrence Mishel and Nicholar Finio find that since 1979, wages of the highest earners grew faster than all other earners before the Great Recession and afterwards. Moreover, the gap between 1% wage earners and every one else has grown dramatically.

Third, it seemingly arbitrarily begins in 1992.  The trends it documents began before end of the early 90's recession and Clinton's election.  The decoupling of wages and productivity took place in the late 1960s or early 1970s and accelerated in the 1980s.  
Great Graphic: Income, Wages and Productivity Great Graphic:  Income, Wages and Productivity Reviewed by Marc Chandler on February 06, 2013 Rating: 5
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