Indeed, the main reason the united states in 2016 is a richer country than it was a century ago is that workers today can produce nine times as much in an policies that directly raised workers' wages, including the first federal minimum wage, the first federal overtime law, and the national labor relations. For wages to grow on a sustained basis, workers' productivity must rise, meaning they must steadily produce more per hour, often with the help of for example, as imports from low-wage countries made inroads into the manufacturing sector, job losses in the united states were substantial in some areas. Many advocates of free trade claim that higher productivity growth in the united states will offset pressure on wages caused by the global sweatshop any difference in the rates of growth of productivity and compensation would necessarily show up as a fall in labor's share of national income -- and as. Most americans believe that a rising tide should lift all boats—that as the economy expands, everybody should reap the rewards and for two-and-a-half decades beginning in the late 1940s, this was how our economy worked over this period, the pay (wages and benefits) of typical workers rose in tandem with productivity.
In addition, higher expected inflation tends to be built into the rate of wage increases, giving a smaller effect if any on the changes in real wages moreover, the response of inflationary expectations to monetary policy can influence the division of the effects of policy between inflation and unemployment (see monetary policy.