ABSTRACT
This chapter examines trends in productivity in the 1980s and 1990s: worker productivity rose while earnings did not. Rather than being distributed to the average worker, these revenues financed executive compensation packages and investments in financial markets by the wealthy. We provide statistical simulations that illustrate that the compensation available through productivity gains, if it were paid in wages, would substantially offset the credit advanced to the middle class. To put it bluntly, the American middle class was loaned money they could have received as earnings.
