Re: "wages and salaries now make up the lowest share of gross domestic product since 1947"
1 - A larger percentage of income for workers has moved to benefits. So looking only at wages and salaries as a percentage of GDP will show the percentage shrinking unless the percentage of worker income has noticeably grown.
2 - Perhaps the biggest surprise in today’s report was a surge in wage-and-salary income during the first half of this year. Between the fourth quarter of last year and the second quarter of 2006, it grew at an annual rate of about 7 percent, after adjusting for inflation, up from an earlier estimate of 4 percent, according to MFR, a consulting firm in New York.
As a result, wages and salaries no longer make up their smallest share of the gross domestic product since World War II. They accounted for 46.1 percent of economic output in the second quarter, down from a high of 53.6 percent in 1970 but up from 45.4 percent last year.
Total compensation — including employee health benefits, which have risen in value in recent years — equaled 57.1 percent of the economy, down from 59.8 percent in 1970. Still, compensation makes up a larger share of the economy than it did throughout the 1950’s and early 60’s, as well as during parts of the mid-1990’s and the last couple of years.
As Emily Litella would say, "Never mind."
gregmankiw.blogspot.com
3 - "Meanwhile, the Gini index has been bouncing up and down between .46 and .47 since 2000 after rising steadily throughout the Clinton years from .43 in 1992 (it was .42 in the mid-1980s).
In short, income equality took a big hit in the 1990s and has been essentially unchanged since Bush took office.
Oh, and the mean incomes of households in each quintile all rose in 2005, so any gains for the top quintile came at the expense of no one."
Message 22767344
Source census.gov
4-
"The Bureau of Labor Statistics does calculate real hourly compensation for the nonfarm business sector, a measure that includes benefits. Let's see what those numbers look like:"
cafehayek.typepad.com
What these numbers show is that for every year since the recession of 2001, real hourly compensation has actually increased. It's up since 2003 as well. And this year it's up quite dramatically.
Any of these measures are at odds with the Times's conclusion.
When you include benefits, labor's share is virtually a constant at 70% of national income and has been steady since the end of World War II, as this St. Louis Fed report shows:
research.stlouisfed.org
cafehayek.typepad.com
cafehayek.typepad.com
5 -
"You can't look at earnings in one year and compensation in another. If tax policy or preferences or regulations or custom causes benefits to become a bigger part of compensation over the years, you'd expect wages and salaries to go down for that reason. And that is the history of the last 40 years--benefits becoming a larger part of total compensation, and wages and salaries becoming a smaller part. That's not a coincidence. They're related.
You have to look at total compensation. Compensation. Not one component one set of years and a different component in a different set of years. The whole package. Certainly you have to look at the whole package if you're going to generalize about bargaining power or changes in standard of living over time.
There are other problems--compositional changes in the labor force distort conclusions. It's really hard to measure inflation. We've talked about that already. But given the numbers you chose to highlight, they don't make your case about either bargaining power or standard of living.
The panel data, the data that follows the same people over time shows people doing better, dramatically better over the last 20 or 30 years, contradicting the wage numbers that take a snapshot at a point in time, where different people are involved. Not just the top 1 or 5 or 10 or 20 per cent. But the median worker and poor workers are dramatically better off when you follow people over time."
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