Labor & Employment Law Daily Wrap Up, REPORTS—EPI links wage stagnation to worker bargaining power decline, (Sep 28, 2026)

By Patricia K. Ruiz, J.D.

The report shows that typical workers lost potential earnings as wages lagged behind productivity growth for decades.

Wages for typical U.S. workers have been largely suppressed since the late 1970s, costing middle-class households about $30,000 annually and contributing to widening income inequality, according to a report from the Economic Policy Institute (EPI). The report, "Wage Suppression in 10 Charts," examines wage, income and labor market trends since 1979 and argues that policy choices weakened worker bargaining power, preventing most workers from sharing proportionately in economic growth. The authors explained that periods of stronger wage growth were the exception rather than the norm and contended that labor market institutions and public policy, not economic necessity, drove much of the divergence between productivity and pay.

Income growth lagged economic gains. The report estimates that households in the middle fifth of the income distribution had average market income of $96,335 in 2022. Had inequality not increased after 1979, those households would have earned about $127,011, or more than $30,000 additional income annually, according to the authors. The report attributes much of the increase in market-income inequality to labor market dynamics that limited wage growth for most workers while allowing gains to accrue disproportionately to top earners.

Worker pay and productivity. According to the report, hourly pay for a typical worker grew at an annualized rate of 0.6 percent from 1979 through 2025, compared with 1.4 percent annual productivity growth. The authors said production and nonsupervisory workers would earn about 45 percent more, or roughly $30,000 annually, if pay had tracked productivity over that period. The report describes the gap between productivity and compensation as evidence that workers have not received the full benefits of rising economic output.

Gains concentrated among highest earners. While wage growth was limited for most workers, wages for the top one percent increased 182 percent since 1979, the report said. The authors further contend that wage suppression contributed to higher corporate profits and rising wage inequality. The report points to highly paid managers and professionals as among the principal beneficiaries of the growing gap between productivity and typical worker compensation.

Labor market policies. The report identifies sustained low unemployment as a key factor behind stronger wage growth during periods such as the late 1990s and the past decade. It also estimates that median wages would be 10 percent higher today if union density in 2025 matched its 1973 level. The authors said policies that strengthen collective bargaining, raise the minimum wage, and maintain full employment could help generate broader wage gains and reduce labor market inequality.

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