(MENAFN- Arab Times) BOSTON Sept 8 (Agencies): The widening gap between America's wealthiest and its middle and lower classes is 'unsustainable' but is unlikely to improve any time soon according to a Harvard Business School study released on Monday. The study titled 'An Economy Doing Half its Job' said American companies particularly big ones were showing some signs of recovering their competitive edge on the world stage since the financial crisis but that workers would likely keep struggling to demand better pay and benefits. 'We argue that such a divergence is unsustainable' according to the report which was based on a survey of 1947 of Harvard Business School alumni around the globe and which highlighted problems with the US education system transport infrastructure and the effectiveness of the political system. Some 47 percent of respondents in the survey said that over the next three years they expected US companies to be both less competitive internationally and less able to pay higher wages and benefits versus 33 percent who thought the opposite. The results marked an improvement from a 2012 Harvard Business School survey of its alumni showing 58 percent of respondents expecting a decline in US competitiveness according to the survey. But Harvard wrote respondents of the 2014 survey 'were much more hopeful about the future competitive success of America's firms than they were about the future pay of America's workers.' Harvard called on corporate leaders to help solve America's wealth gap by working to buttress the kindergarten-to-12th-grade education system skills-training programs and transportation infrastructure among other things. 'Shortsighted executives may be satisfied with an American economy whose firms win in global markets without lifting US living standards. But any leader with a long view understands that business has a profound stake in the prosperity of the average American' according to the report. 'Thriving citizens become more productive employees more willing consumers and stronger supporters of pro-business policies' it said. 'Struggling citizens are disgruntled at work frugal at the cash register and anti-business at the ballot box.' Jan Rivkin one of the survey's lead authors suggested that a failure by companies to develop a skilled workforce could ultimately hurt those companies and the competitiveness of the US economy. 'The bleak picture facing middle and working class Americans are the canary in our coal mine' said Rivkin a Harvard business professor. 'Eventually that will come back to haunt business.' The survey reflects the unevenness of the recovery from the Great Recession. Since the recession officially ended more than five years ago many of the gains in employment income and wealth have failed to circulate through the entire economy. Few workers have received meaningful pay raises. Median household incomes adjusted for inflation are below their pre-recession levels according to estimates by Sentier Research. The median income was $54045 in July about 4.6 percent lower than when the recession began in late 2007. The survey suggests that incomes aren't likely to increase much anytime soon. Forty-one percent of respondents see lower wages and benefits ahead; just 27 percent expect pay raises. The survey's responses run counter to some traditional economic models. Historically a falling unemployment rate the US rate has dropped steadily to 6.1 percent tends to spur competition among employers for workers and leads them to raise wages and salaries. The survey found that many companies are reluctant to add jobs if other alternatives exist. Only 25 percent said they preferred investing in employees compared with 46 percent who would rather spend on technology. Forty-nine percent favored outsourcing work over hiring. The companies have become more dependent on part-timers in the past three years and say it's harder to fill skilled positions. The economic recovery has left many executives feeling more optimistic about the competitiveness of the US economy compared with the first survey of alumni taken three years ago. Slightly less than half say the economy is becoming less competitive relative to other countries. That marks an improvement from 71 percent who said so in 2011 and 58 percent who did in 2012. These executives have reasons to be more upbeat. The Standard & Poor's 500 stock index closed last week at a record high. Stock gains have been fueled in part by solid profits from publicly traded companies. And the median compensation for a chief executive at a publicly traded company topped $10.5 million last year according to an analysis by the Associated Press.
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