Ending Hunger in America, 2014 Hunger Report Full Report | Page 123

CHAPTER 3
If productivity grew at a 2.3 percent annual rate over the next 25 years, and workers got
their fair share of the growth, wages (after being adjusted for inflation) would be on average
more than 75 percent higher than they are today. In 2038, a typical worker would be able
to buy 75 percent more goods and services than a typical worker today.116 If productivity
growth was, instead, just 1.3 percent annually for the next 25 years, a typical worker would
still have a wage that is 38 percent higher than the average wage today. “In short,” says
Dean Baker of the Center for Economic and Policy Research, “even in a worst-case scenario, where productivity falls back to the slowest pace we have seen in the last 70 years,
workers will on average be much wealthier than workers are today.”117
Trying to predict how productive the U.S. economy will be over the next 25 or 50 years
is, at best, guessing. But unless we believe technological advancement has reached a limit,
then productivity growth over the long run is virtually guaranteed. Suffice it to say: whether
productivity growth is closer to 2.3 percent or 1.3 percent, wage growth will be more than
enough to compensate for the effect on workers’ living standards of a growing burden of
retirees.
This discussion about productivity growth at the end of a section about ending senior hunger
is not a digression. It is, in fact,
central to understanding why we
can end senior hunger and how
we can do it at a reasonable cost.
Productivity growth makes it possible to easily finance higher living
standards for retired people.
The only problem with this optimistic image of the future is that
for the last three decades, workers
have not been sharing equitably
in the gains from productivity
growth. As we discussed in Chapters 1 and 2, the vast majority of
the gains from growth have gone
to those at the top of the income
distribution, while the wages of
most workers have eroded or
barely kept pace with inflation.
Whether or not we restore the link
between productivity growth and
wage growth will determine the
living standards of our children
and grandchildren.

www.bread.org/institute?

The living standards of our
children and grandchildren
will depend mostly on
restoring the link between
productivity growth and
wage growth.

Richard Lord

? 2014 Hunger Report? 113

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