In the book Race Against the Machine, Erik Brynjolfsson and Andrew McAfee of MIT’s Sloan School of Management present a chart showing U.S. productivity, GDP, employment, and income from 1953 to 2011. The chart looks as you would expect from 1953 until the mid-1980s, with every one of the measures rising together: employees work more productively, companies make more money, and more hires occur as the middle class swells.
Then, during Reagan’s tenure, the bad news begins to show its face. First, even though productivity and GDP continue their upward arc, median household income starts to level off. That is unsettling, since it suggests that companies can get richer and yet employees can stop benefiting from increasing GDP: what happened to trickle-down?