Seizing Intangibles for the G.D.P.
By LOUIS UCHITELLE
Published: April 9, 2006
THE plain fact is that when it comes to measuring how much the American economy produces and who gets what share of the pie, the federal government's most celebrated statistic — the gross domestic product — leaves something to be desired.
The G.D.P. is useful, as far as it goes. It tells us how much value — often called national income — is generated each year from the production of goods and services in the United States. The G.D.P. also breaks out how much of that income goes into profits and how much into wages and salaries.
This is where the trouble is. The numbers show that the profit portion of the gross domestic product has risen mildly in recent years, while the wage-and-salary share has shrunk slightly. There is evidence, however, that because of the way the G.D.P. is calculated, the actual shift is much more pronounced.
"We know that income inequality is quite substantial," said Harry J. Holzer, a labor economist at Georgetown University, "and this new evidence suggests that it is worse than we thought."
The Bureau of Economic Analysis, which issues the G.D.P. reports each quarter, is on the case. So are two prominent economists at the Federal Reserve. They all seem to be finding that the current methods for calculating G.D.P. undercount the dollar returns from research and development. What's more, this payoff is not showing up in workers' paychecks.
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