Feb. 6 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said restrictions on labor markets and trade ``would not be helpful'' to eliminating growing wage inequality in the American workforce.

``Policy approaches that would not be helpful, in my view, are those that would inhibit the dynamism and flexibility of our labor and capital markets or erect barriers to international trade,'' Bernanke said at an event sponsored by the Omaha Chamber of Commerce in Nebraska. Any hindrance of trade and technology would ``do far more harm than good.''

Bernanke's theme takes up one of the major issues of the new Congress where Democrats won a majority partly due to rising economic insecurity, according to polls. The chairman, now in his second year, was careful to avoid prescriptions for solving income inequality or concluding that its causes result from any one problem such as executive pay, which he discussed.

``Understanding the sources of the long-term tendency toward greater inequality remains a major challenge for economists and policy makers,'' Bernanke said.

He didn't discuss the U.S. economy or interest rates in his remarks.

The jobless rate of 4.6 percent, close to a five-year low, may appease some Democrats when Bernanke delivers his semi- annual monetary policy report to Congress next week. He is still likely to be grilled on income disparity, which has worsened in the U.S. despite strong economic growth, productivity gains and slowing inflation.

Share of Income

Families earning more than $103,100 a year saw their share of aggregate income rise to 48.1 percent in 2005, from 46.5 percent a decade earlier, according to Census Bureau figures. Middle-income families earning between $45,000 and $68,300 saw their share of aggregate income decline to 15.3 percent, from 15.8 percent in 1995.

Almost three-quarters of Americans believe inequality is a major issue, versus 24 percent who don't think so, according to a Bloomberg/Los Angeles Times poll taken between Dec. 8 and Dec. 11. Most of the concern is among Democrats and independent voters, though a majority of Republicans -- 55 percent -- also called the situation serious. The poll of 1,489 adults had a margin of sampling error of plus or minus 3 percentage points.

The U.S. labor force is working smarter and faster with the help of technology, keeping output per hour at a 3 percent average growth rate during the expansion which began in the final quarter of 2001. Still, the productivity gains are not showing up in bigger paychecks.

Post-War Low

Wages and salaries as a share of the cash corporations generated by producing a good or a service stood at 50.2 percent last year, the lowest in the post-war period.

``The prosperity that we've had has not been widely shared,'' said Isabel Sawhill, senior fellow at the Brookings Institution in Washington, who has researched economic mobility. ``It's not so much that the middle is moving away from the bottom as it is that the top is moving away from everyone else.''

Economists offer several explanations for income disparity, ranging from higher returns on education, to the demise of organized labor, to rising executive compensation, as well as immigration and globalization. Bernanke touched on all those themes.

``If new technologies tend to increase the productivity of highly skilled workers relatively more than that of less-skilled workers -- a phenomenon that economists have dubbed `skill-based technical change' -- then market forces will tend to cause the real wages of skilled workers to increase relatively faster,'' Bernanke said.

Executive Pay

On executive pay, Bernanke noted research that says the economic value of skilled leadership has increased as firms have grown larger. He also discussed the franchise value of star athletes, which has boosted their compensation, citing the 2004 $22.5 million pay package for Manny Ramirez of Major League Baseball's Boston Red Sox. At the same time, he noted research that points to weak corporate governance as a source of high executive compensation.

Bernanke said policies that focus on education, job training, skill development and job mobility seem ``promising.''

Pay trends may now be shifting as unemployment has remained below 5 percent since November 2005. The wages and salaries measure from the employment cost index, a broad compensation measure produced by the Labor Department, showed 3.2 percent year-over-year gains in the third and fourth quarters of last year. The increases were the largest since the third quarter of 2002.

House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, has made income disparity a central issue for his committee. Frank wants shareholders to have more influence over executive pay.

To contact the reporter on this story: Craig Torres in Washington at ctorres3@boomberg.net; Anthony Massucci in New Yorkat amassucc@bloomberg.net.

Last Updated: February 6, 2007 15:07 EST