Over the last 30 years the American economy has exhibited a systematic disconnection between wages and productivity growth. This disconnection means that ordinary Americans are not properly sharing in the economy’s growth, thus contributing to rising income inequality.

Rising inequality and the failure of wages to rise with productivity has triggered a fundamental debate among Democrats. One position argues that the underlying structure of the economy is sound, but workers must be offered a “helping hand” in the form of enlightened social policy, in the form of income supports, tax credits, educational assistance, and wage insurance. Policy would thereby ameliorate the effects of the disconnection between wages and productivity growth.