WASHINGTON (MarketWatch) — Here’s what’s wrong with the American economy in one tweet-sized bite:

The typical American worker is twice as productive as in 1979, but his wages haven’t increased one penny after adjusting for inflation.

The makers are producing almost twice as much per hour, but the boss is taking almost all the benefit of that increased productivity. Profits are at record levels, CEO pay is through the roof, but the worker is still getting 1970s wages.

That’s the main reason the economy is struggling to grow, and the main reason that millions of Americans are barely scrapping by, living paycheck to paycheck. Our consumer-driven economy is on a starvation diet.

Here are the bare facts:

The usual weekly wages of the median full-time worker (half of workers earn more, half earn less) increased by $4 between December 2012 and December 2013 to $782, according to the Bureau of Labor Statistics. That’s up 1.3% in the past year. The only problem is that prices increased 1.5%.

In real terms, the typical worker slipped further behind.

After adjusting for inflation, median earnings at the end of 2013 were equivalent to $334 in 1982 dollars, no higher than they were in 1999, and just slightly below the $335 that the median worker earned in the summer of 1979.

The median household income has increased slightly — 5% since 1979 — but only because more families are relying on Mom’s wages.

An essential part of the American Dream promises that our children will live a better life than we do. That dream is dead, or at least deferred. The typical worker today makes no more than his dad did.

Productivity has nearly doubled since 1979. MarketWatch

At the same time that pay has stagnated, productivity has soared. Output per hour worked is up 94% since 1979. Something that took an hour to make in 1979 now takes just 31 minutes. The improvement is due to greater use of technology, better organization, and increased skills and human capital of the workers.

During the heyday of the American middle class from 1945 to 1979, worker pay generally increased in line with productivity gains. Workers and owners shared the benefits in roughly equal measure. Higher productivity meant workers got a raise without cutting into profits. The pie got larger.

But since 1979, which some mark as a turning point in our economic history, the owners and managers have reaped almost all of the benefits of higher productivity.

Labor’s share of the pie has shrunk from about 62% of business output to just 57% today, near a record low. And that number really overstates what workers receive, because “labor” includes the compensation (including stock options) of top managers, which has soared in the decades since the 1970s even as pay has stagnated on the shop and office floors.

If labor’s share had remained constant, workers would be getting about $400 billion more per year in compensation. If that were split evenly among all 150 million workers, it would total about $2,700 more for each worker. And almost all of that money would be spent on goods and services produced by other workers.

A significant portion of our unemployment problem could be fixed if workers were getting —and spending — a larger share of our national output.

Profit margins are much higher than normal. MarketWatch

Who’s getting the share that used to go to labor? Mostly the owners. Profits from domestic operations have more than doubled in inflation-adjusted terms since the late 1970s even as median wages are flat. Profit margins in nonfinancial companies have risen to nearly 15% of gross valued added, about 4 percentage points higher than average.

Unfortunately, those profits aren’t being reinvested in the economy; they are sitting idle.

The top managers are also getting a much larger share of the pie. According to an analysis by Josh Bivens and Larry Mishel of data from the Congressional Budget Office and from Thomas Piketty and Emmanuel Saez, the income of the top 0.01% of earners (the top 1 in 10,000) has increased at a 6% annual rate since 1979 (compared with a 1% increase for the bottom 90%.)

The top 0.01% of earners are overwhelmingly corporate managers, top executives in finance, corporate lawyers and investors. This group makes an average of about $16 million a year, or about $300,000 per week.

This imbalance between the ultra-rich and everyone else would be fine if it were fair, if winners were really rewarded for excellence, and losers really lost, but that’s not the way business works. CEO pay isn’t based on excellence, but on rent-seeking behavior that increases their pay far above what is economically justified.

In a you-scratch-my-back, I’ll-scratch-yours arrangement, CEO essentially set their own pay, and their pay determines how much other top executives will be paid. The pay for CEOs who run successful companies is no higher than the pay of mediocre CEOs. U.S. CEOs get paid far more than their counterparts in other countries, but don’t perform any better.

For instance, J.P. Morgan JPM, -0.21% CEO Jamie Dimon will get paid $20 million for 2013 (a 74% raise) despite heading a company that had to pay $20 billion in fines for its bad behavior.

Income inequality might also be justified if everyone had an equal opportunity to be rich, but we know they don’t. How much money you make is influenced a lot by how much your parents made, and by how much their parents made. To a large extent, the rich merely won a lottery at birth. They were born on third base and go through life thinking they hit a triple, in Barry Switzer’s immortal phrase.

A study published just this week shows that economic mobility is not getting worse in the United States, as many people have assumed. But mobility — the ability to move up or down depending upon individual ability and effort — is far too low. Even stagnant European countries give their poor and working-class youth far greater opportunities to rise above than we do.

We’re going to hear a lot more about income inequality in the coming weeks, as Barack Obama reportedly plans to make it a centerpiece of his State of the Union speech. Amid all of the political posturing over the issue, keep one thing in mind: A majority of those who are living in the Land of Opportunity are struggling just to keep from falling further behind.

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