$1T. That's How Much Workers Are Losing to Owners Each Year
nytimes.com
nytimes.com
This is a very complicated subject. Here is an analysis that shows the contrary result: https://www.econlib.org/the-real-wage-myth. One important observation: looking at wages alone, like the article does, excludes the value of benefits such as healthcare:
> BTW, these time series understate the growth in total labor compensation, as the cost of fringe benefits such as health care has risen faster than nominal wage growth. Alternatively, if you believe that health benefits are nearly worthless (my view), then the nominal wage series should be deflated by a price index that excludes health care. That would show even more rapid growth in real wages.
Basically, at the very least you’re not comparing like with like. Either include the value of health benefits in compensation, or exclude the contribution of healthcare in overall economic growth. There are also numerous other mathematical complexities. You need to adjust wages for inflation (using some index) and convert GDP to current dollars (using some index) but generally different indexes are used for the two. You also need to pick a baseline. 1970 is often used, but that was a recessionary period. Counter-intuitively, the ratio of wages to the overall economy is highest during recessions. Also, it’s not just workers and owners in the pirate ship analogy. Landowners also get a cut and their cut is growing. Accounting for both effects, the share of income going to non-housing capital owners is up a bit, but was about the same in 2005 as in 1960: http://voxeu.org/sites/default/files/image/FromMay2014/lacav...
I’m not sure what the right answer is. What I’m sure about is that cobbled together vignettes sprinkled with uncited, unexplained numbers that are more garnish than substance does not help anyone understand the issue at all. It’s empty calories.
This is not a comprehensible narrative. What the heck is a random aside about student protesters in the 1970s doing in the middle of—what? An advocacy piece about tax structure? Can you imagine if your boss asked you to put together a white paper on some issue to present to management, and you presented her something like this, with a few facts facts thrown in randomly between irrelevant filler anecdotes?
If you want to tell stories, then fine. If you want to write advocacy white papers making a factual argument, fine. But this is neither thing. It’s a hybrid form that uses narrative and anecdote to fill in for the extremely thin facts and analysis. What is the social value of this type of writing?
As to unions: what do they have to do with anything? Many countries with strong unions have see a similar or even greater decline in labor share of income. The US is not really much different than any other advanced economy on that front: https://www.mckinsey.com/~/media/mckinsey/featured%20insight.... In the US, labor’s share of income is less than France, about the same as Germany, and more than Spain. It’s significantly higher than Sweden, which has robust unions.
Moreover, nearly all the decline in labor’s share of income happened between 2000 and today. The decrease was very slight from 1947 to 2000. But unions stopped being a significant force in the US long before 2000.
> Picture the nation as a pirate crew: In recent decades, the owners of the ship have gradually claimed a larger share of booty at the expense of the crew. The annual sum that has shifted from workers to owners now tops $1 trillion.
I couldn't help but feel that if they failed to research their examples that the rest of the article is probably not well researched either.
(You wouldn't want to use pirate ships of yore as an example of poor or inequitable labor conditions, because they were often much better than the alternatives: https://en.wikipedia.org/wiki/Governance_in_18th-century_pir... )
It's very odd to write off a full piece based on this choice, especially so for "accuracy reasons" than rhetorical device choices.
It's impossible to tell without far more work than the article justified.
The history of pirate labour isn't particularly obscure. So either the article wasn't reviewed by someone with more than a passing interest in labour relations or it was and they just didn't care that they used probably one of the worst historical examples they could have used just because it made for good imagery.
>In the nation’s slaughterhouses, the average worker in 1982 made $24 an hour in inflation-adjusted dollars, or $50,000 a year. Today the average meatpacker processes significantly more meat — and makes less than $14 an hour.
Uh, no. Not really. If this was an honest comparison you'd be comparing their profit output, not meat output. Because the output of significantly more meat does not mean significantly more profit. It can mean significantly less profit. Meat is a razor-thin margin industry.
>Even in the high-flying technology sector, companies have found ways to leave their workers behind. More than half of the people who work for Google do not actually work for Google. They are classified as contractors, which means they do not need to be treated as employees.
Why is a voluntary contract a problem here? Why is this bad?
>The Economic Policy Institute estimates that employers illegally deprive workers of more than $50 billion in wages each year by underpaying them or requiring unpaid work; violators are rarely punished.
So, a union think-tank. Any reputable source?
>And those who waited longest for new opportunities after the 2008 financial crisis have often been among the first to lose their jobs. Black people and women have been especially hard-hit.
Absolute dishonesty, bordering on straight-up lies. Black unemployment is at a 50 year low.
> Americans in the bottom 90 percent of the income distribution would be making an extra $12,000 per year, on average.
This is misleading. $12k sounds like a lot compared to someone making the poverty line, but it's as much compared to a household at the 90-percentile income (~$200k), and high percentile incomes dominate that average because incomes in the bottom 90% are also rather unequally distributed too.
The point that additional wealth has consolidated at the top due to wage stagnation is a fine point to make, but they way they chose to represent it exaggerates the point.
Business rhetoric promises to do better, but they're incentivized to do otherwise.
I don't see much hope for solutions, politically or economically. Maybe I'm just in a mood but things look grim.