I mean that people seem to be being paid roughly what they're worth, and at that level the median household ends up with $50K or so (the average household does even better because of the skew at high incomes). $50K isn't great, but it's not, IMHO, indicative of workers with no negotiating power. How do we get from there to rayiner's "future" of Rosa Ramirez?
People are paid just less than MIN(cost to replace their labor in the labor market, cost to replace their labor with automation). Using terms like "worth" or "deserve" invoke a moral framework and it is unnecessary to do so. There is one moral framework where people are "worth" the price of their labor at the equilibrium of supply and demand, but that's not the only conceivable arrangement. For example, partners in a joint venture are rarely compensated on the equilibrium of supply and demand, but based on some percentage of the value of the venture. If someone's labor creates $X of value, there is no reason to say it is "worth" whatever it would cost to hire someone else to do the same labor instead of saying it is "worth" say 0.2 * $X.
Which brings me to the issue of $50k median household income. Contrary to your assertion, it is highly indicative of workers with weakening negotiating power. The story of the last 30 years has been one of inflation-adjusted individual income (using household income is misleading because it glosses over changing labor force participation trends) lagging individual worker productivity. That means of each dollar value created by each worker, the employer (usually the capital owner) gets to keep more of that dollar today than they did 30 years ago. That is exactly what you would expect based on a decrease in workers negotiating power.
This isn't a political argument, it's an economic argument. I'm not endorsing any particular steps towards remedying this issues. I'm pointing out the economic phenomena we are seeing.
Do you have some numbers on individual worker income vs. individual worker productivity? Most numbers I've seen have been aggregated.
And do you really believe that all productivity improvements would be captured by workers with sufficient negotiating power? What's the incentive for the capital owner to invest in new technology that would improve productivity if there's no profit motive because all the added revenue ends up in the workers' pockets?
Also, real wages keeping pace with productivity improvements does not imply that the workers have captured all (or even most!) of the increased value yielding from productivity improvements. Say a worker produces $100 of value per day in 1970 and $150 per day (both inflation adjusted) in 2010. Productivity is up 50%. If his wages rise from $20 per day in 1970 to $30 per day in 2010, his wages will also be up 50%. But he will have captured only 20% of the increased value his labor generates ($10 out of $50 per day). The remainder is profit to his employer. However, he will have maintained his share of his total production at 20% (20 / 100 == 30 / 150), which is consistent with his maintaining negotiating power against his employer.
But, what happens if his wage only rises from $20/day to $25/day? He will have captured only 10% of the increase in value from 1970 to 2010, but more importantly, his share of his total production will have fallen from 20% to 17%. That is consistent with a declining negotiating position.
You're assuming that productivity gains are something like normally distributed while income gains have (obviously) not been. But I'm not sure that's true.
Look at the composition of the top 1% of earners. The Times as always has a helpful infographic:
Huge chunks (certainly an overwhelming majority!) aren't managers or CEOs in a position to "capture" the value from the productivity of their underlings. In fact, it seems like your best bet is to be a doctor with his own practice. His productivity (or at least the market value of his services) has skyrocketed as medical science has improved, and indeed he has captured much of those gains. Ditto for, say, a Google engineer today vs. a DEC engineer of 30 years ago.
Also, a bunch of the profit from those productivity gains has surely made its way into equity prices and dividends. Nobody needs negotiating leverage to access those, just savings and investment. And indeed, workers today wisely take a larger % of their earnings in benefits like stock options and 401(k) matches, not wages.
If I understand your argument correctly, you're saying that the results might be explained by the vast majority of productivity gains happening among the 1%, so that the median worker's productivity hasn't really increased as much as the overall average productivity. I don't think that's correct, for two reasons:
1) The 1% necessarily account for a small percentage of workers, and thus are unlikely to account for the huge increases in overall productivity we're seeing. A doctor is not 10x as productive as he was 30 years ago.
2) The theory is inconsistent with what we know about specific segments of the economy. E.g. in the U.S., manufacturing output per worker has skyrocketed in the last 30 years: http://mjperry.blogspot.com/2010/02/us-manufacturing-ouput-p.... Manufacturing worker productivity has doubled in less than 20 years, but wages have totally stagnated.
It is true that wage comparisons are a little misleading because they don't take into account benefits. But the fact of the matter is that your average worker doesn't get benefits like stock options or 401(k) matching. Less than half of Americans even half a 401(k) plan, much less matching employer contributions: http://www.cnbc.com/id/100578392. The vast majority of workers simply do not own enough stock or equity to more than marginally offset how wages have failed to keep pace with productivity gains.
You're right that the bulk of the gains from improved productivity have made their way into equity prices and dividends, but that's nothing more than another way of saying what I said: capital owners are capturing an increasing percentage of the value generated by labor, as a result of the decreased negotiating power of labor. Sure, anyone can buy stock, but as a practical matter a small fraction of the population owns the vast majority of stocks and business equity: http://www2.ucsc.edu/whorulesamerica/power/wealth.html. The top 10% owns 88% of all non-housing investment assets. The top 1% owns half.
Note that this point is independent of the "fairness" of that asset distribution in the first place. A small percentage of the population has always owned most of the wealth. That's not necessarily the troubling part. The troubling part is that the fraction of the value generated by labor that is captured by the laborers rather than the owners of capital is shrinking. That's consistent with a deteriorating negotiating position, not a stable one.
In a situation where the worker was capturing all of the productivity improvements then it would be in the workers interest for the workers to invest in new technology to improve productivity.
I think we are quite far from a situation where a worker has enough negotiating power to capture everything. What we have is a situation where the share of the worker as a % of total is declining. A situation where that % doesn't buy financial security can look ugly quick.
Under that model there is a large number of workers who are worth nothing at all or only their bare sustenance. Now this might be true to some degree from an economic standpoint (in that it's an equilibrium) but it doesn't look so rosy from a societal standpoint. And what purpose does the economy have if not to serve society?
You also have to contend that market prices for labour would likely be higher if there were not so many unemployed. With low unemployment then firms would have incentive to make some of these temps into full time workers to prevent another firm from taking the best workers out of the temp pool.
From a societal standpoint, it's absolutely horrible. This train can't go on forever. At some point, the chorus of "basic income" from the large number of chronically unemployed will become too loud to ignore. For places that already have one, a recalibration towards an "Arts, Sports, and Lesiure society" should already be starting.
