Source: St Louis Fed ( Wages and productivity) However, on further investigation, the link between productivity and pay is closer if we use total compensation per worker (which includes bonuses, and end of year pay)
In the US, wages for manual workers have started to lag productivity. However, productivity only partially to blame Low wage growth is causing low productivity with low wages and firms not investing when labour is cheaper.Uncertainty in the global economy is discouraging investment.Low wage growth is in turn leading to less investment and lower productivity as firms find it cheaper to employ low-wage workers rather than invest in capital.In the Great Recession, firms hung on to workers but resisted wage cuts (due to the negative impact of cutting nominal wages on workers motivation), So in the recovery, firms are not raising wages but recouping previous trends.A slowdown in major technological advances (AI and internet not giving as many gains as hoped).This raises the question of why is labour productivity growth slowing? UK Real wage growth stagnates after 2008.
Since the Great Recession of 2008, UK productivity has stagnated, causing at least part of the stagnation in wages. The UK is a good example of an economy that has seen very poor productivity growth in recent years. In periods of high productivity growth, wage growth tends to match the growth in productivity. If the output per worker is stagnant, then, ceteris paribus, the firm cannot afford to increase wages. Labour productivity is a key determinant of wages. With the US, Canada and Japan experiencing much lower than usual wage growth. Italy and the UK have seen negative real wage growth. This shows that wage growth in the most advanced G20 economies is notably lower than for emerging economies, like China, Taiwan, Korea
Low wage growth in advanced G20 Countries IMF Global wage report 2018/19 Change in labour market with more part-time, temporary and zero hour contracts.Reasons to explain this slow growth of wages include This phenomenon of slow wage growth, despite falling unemployment, is marked in countries such as the UK, Japan and the US. In recent years, many advanced (high-income) economies have seen a marked fall in unemployment but only very slow or even negative real wage growth.