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Race to the Bottom: Low Productivity, Market Power, and Lagging Wages

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  • Lance Taylor
  • Özlem Ömer

Abstract

“Dualism” in the structure of production across sectors of the U.S. economy, employment by sector, productivity levels and growth, real wages, and intersectoral terms of trade increased markedly between1990 and 2016. The discussion focuses on 16 sectors. Seven were “stagnant”—construction, education and health, other services, entertainment, accommodation and food, business services, and transportation and warehousing. They had low productivity levels, productivity growth rates hovering around zero, and low real wages. Their share of total employment rose from 47% in 1990 to 61% in 2016. The other “dynamic” sectors had higher and positively growing productivity while the terms of trade shifted against them. This bifurcation between industries is discussed in terms of a simple model. Increasing duality and secular stagnation are distinct possibilities.

Suggested Citation

  • Lance Taylor & Özlem Ömer, 2019. "Race to the Bottom: Low Productivity, Market Power, and Lagging Wages," International Journal of Political Economy, Taylor & Francis Journals, vol. 48(1), pages 1-20, January.
    • Handle: RePEc:mes:ijpoec:v:48:y:2019:i:1:p:1-20
    DOI: 10.1080/08911916.2018.1550951
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    References listed on IDEAS

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    1. Lance Taylor & Özlem Ömer, 2020. "Where do profits and jobs come from? Employment and distribution in the US economy," Review of Social Economy, Taylor & Francis Journals, vol. 78(1), pages 98-117, January.
    2. Temin, Peter, 2017. "The Vanishing Middle Class: Prejudice and Power in a Dual Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262036169, December.
    3. Servaas Storm, 2017. "The New Normal: Demand, Secular Stagnation and the Vanishing Middle Class," Working Papers Series 55, Institute for New Economic Thinking.
    4. Amartya K. Sen, 1966. "Peasants and Dualism with or without Surplus Labor," Journal of Political Economy, University of Chicago Press, vol. 74, pages 425-425.
    5. Servaas Storm, 2017. "The New Normal: Demand, Secular Stagnation, and the Vanishing Middle Class," International Journal of Political Economy, Taylor & Francis Journals, vol. 46(4), pages 169-210, October.
    6. Gregor Semieniuk, 2018. "Energy in Economic Growth: Is Faster Growth Greener?," Working Papers 208, Department of Economics, SOAS University of London, UK.
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    Cited by:

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    2. Thomas Ferguson & Benjamin Page & Jacob Rothschild & Jie Chen & Arturo Chang, 2018. "The Economic and Social Roots of Populist Rebellion: Support for Donald Trump in 2016," Working Papers Series 83, Institute for New Economic Thinking.
    3. Servaas Storm, 2023. "Lance Taylor (1940–2022): Reconstructing Macroeconomics," Development and Change, International Institute of Social Studies, vol. 54(5), pages 1331-1353, September.
    4. Pedro Spindler-Ruiz, 2021. "Mexican Niches in the US Construction Industry: 2009–2015," Journal of International Migration and Integration, Springer, vol. 22(2), pages 405-427, June.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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