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

“Dualism” in the structure of production across sectors of the US economy, employment bysector, productivity levels and growth, real wages, and intersectoral terms-of trade increasedmarkedly 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 totalemployment rose from 47% in 1990 to 61% in 2016. The other “dynamic” sectors had higherand positively growing productivity while the terms-of- trade shifted against them. Thisbifurcation between industries is discussed in terms of a simple model. Increasing duality andsecular stagnation are distinct possibilities