When Productivity Rises, Who Gets the Raise?

By Imari Burton, Dayton Weekly News

For years, the conversation about work in America keeps coming back to the same argument: raise the minimum wage, and workers will be better off. There is truth in that. But raising the wage floor, on its own, will not fix the deeper problem. Work is not reliably producing economic security for the people doing it.

That is the real question worth asking. Not simply whether the minimum wage should be $11, $15, or $20, but why full time work so often fails to add up to a stable life. In Southwest Ohio, that gap between working and getting by is not abstract. It shows up in paychecks every week.

The local evidence

In Montgomery County, a full time worker earning Ohio's $11 minimum wage, which rises every January under a measure Ohio voters approved in 2006 tying it to inflation, brings home $22,880 a year before taxes. MIT's Living Wage Calculator puts the true cost of covering rent, food, transportation, and other basics for a single adult in Montgomery County at $20.53 an hour, nearly double the state minimum. That gap is not a rounding error. It is the difference between falling short every month and actually getting by.

That gap plays out at scale, not just in individual paychecks. According to the 2026 State of ALICE in Ohio report from United For ALICE and Ohio United Way, 39% of Montgomery County households, 25% classified as ALICE (Asset Limited, Income Constrained, Employed) and another 14% living below the federal poverty line, did not earn enough in 2024 to cover a basic household budget. These are working households. Many hold down full time jobs. They still cannot consistently make ends meet.

Why the gap exists

So if raising the minimum wage alone will not close that gap, what will? Part of the answer lies in a trend that has been building for nearly half a century. According to Policy Matters Ohio's State of Working Ohio 2026 report, worker productivity in Ohio grew 84% between 1979 and 2024, while median compensation grew just 22%. Ohio workers, in other words, have been producing dramatically more economic value than earlier generations, without anywhere near a matching increase in pay.

That was not always the case. Bureau of Labor Statistics data shows productivity growth in the nonfarm business sector averaged 2.8% a year between 1947 and 1973, then slowed sharply to 1.2% a year between 1973 and 1979. Productivity growth itself was already cooling in that second stretch. What changed after the late 1970s was not just how fast the economy grew, but how consistently workers shared in those gains, however large or small they were.

Not everyone agrees on how big the gap is

Not every economist agrees the gap is as large as it looks. Harvard economist Robert Lawrence, writing for the Peterson Institute for International Economics, has argued that once total compensation, including benefits, is measured consistently with productivity and adjusted for inflation the same way, pay and productivity actually moved together fairly closely between 1970 and the early 2000s. The late economist Martin Feldstein made a similar case in a 2008 National Bureau of Economic Research paper, finding that labor's share of national income in 2006 (64%) was close to where it stood in 1970 (66%), once total compensation, not just wages, was counted.

That disagreement is not just an academic footnote. It reframes the question. If total compensation, benefits included, has tracked productivity reasonably well for long stretches of the past half century, then the more urgent question is not only how big the paycheck is, but how much of a worker's total compensation actually shows up as spendable income rather than benefits that do not help pay this week's rent, and whether the gains have been shared evenly across the workforce or concentrated at the top.

The question that actually matters

None of this settles the argument over whether Ohio's minimum wage should be higher. It should not have to. A higher minimum wage can genuinely help a worker cover this month's bills. That is real, and it matters. But it is not, by itself, an answer to the larger question raised by a 39% ALICE rate in Montgomery County and a widening productivity gap statewide. Why does full time work not reliably translate into economic security, and what combination of wages, benefits, cost pressures, and policy would actually change that?

Until that question gets a serious answer, any debate over the next dollar added to the minimum wage will keep circling the smaller problem instead of the larger one.

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Sources

1. Ohio Department of Commerce; Policy Matters Ohio, State of Working Ohio 2026 (minimum wage, productivity/compensation figures)

2. MIT Living Wage Calculator, Montgomery County, Ohio (data updated Feb. 15, 2026)

3. United For ALICE / Ohio United Way, The State of ALICE in Ohio: 2026 Update on Financial Hardship, Montgomery County report

4. U.S. Bureau of Labor Statistics, nonfarm business sector productivity growth rates

5. Robert Z. Lawrence, Peterson Institute for International Economics

6. Martin S. Feldstein, "Did Wages Reflect Growth in Productivity?"

7. NBER Working Paper No. 13953 (2008)