The Potential of America

A worker at the Columbus Castings foundry in Columbus, Ohio Photograph by Ty Wright/Bloomberg

Workers have suffered worsening terms of trade, in which the prices of things they buy (i.e., consumer goods and services) have risen faster than the items they produce (consumer goods but also capital goods). Thus, if workers consumed microprocessors and machine tools as well as groceries, their real wage growth would have been better and more in line with productivity growth.

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