According to Harvard economist Martin Feldstein, the share of US national income going to employees is at approximately the same level now as it was in 1970. This finding contradicts an oft-repeated claim about stagnant incomes, says the American.
Two principal measurement mistakes have led some analysts to conclude that the rise in labour income has not kept up with the growth in productivity, says Feldstein. The first of these is a focus on wages, rather than total compensation:
The second mistake is to use different price deflators to measure productivity and real compensation, which yields misleading results, says Feldstein:
Source: Compensation Confusion, The American, July/August 2008.
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