The labor share of income in the US is at its lowest post-war level

pocksuppet

55%? Ew. We can get it even lower. I want my profits.

scrumbledober

it feels like every share of income is at its lowest except for the ultra wealthy.

lbarrow

Interesting that most of the decline happened in the 2000s. The graph shows a large decline from ~2000 to ~2008 which continues after the GFC before going up a bit in the 2010s. The drop off since COVID is comparatively small.

kevmo

This is clearly heading in a direction where the USA is going to elect a huge number of socialists, who in turn are going to enact massive taxes on billionaires and break up the monopolies.[1] This is why I think the billionaire oligarchs are literally mentally ill. They've won the entire game. They control everything. They live like gods, they twitch a pinky and millions dance. But their response to all of this power is to seek even more of it, destabilizing the very system that has them on top. You would think self-preservation would kick in. The fact that it is not and that their greed knows apparently no bounds is going to lead to their extinction. For a long time I thought it was hyperbolic to say so, but no longer -- the billionaires are mentally ill. [1] https://work.news/post/project-2031/

jameslk

The submitted title is a bit sensationalist given the article’s conclusion: > Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. First, the labor share’s trajectory post-COVID broadly follows the cyclical patterns observed in earlier recessions, with a decline during the recovery phase that mirrors historical dynamics. Second, the decline in the labor share since COVID is driven primarily by within-industry changes rather than shifts in economic activity across sectors. Taken together, these results suggest that the post-COVID decline follows the same cyclical patterns as earlier recessions and is driven by the same within-industry forces, and they provide little evidence that it will evolve differently from past episodes. What I find more interesting is the sharp drop around the early 2000s

nimbius

this is relatively unremarkable for those with an understanding of wage, labor, profit, price and capital. capitalism will always seek to reduce labor cost. during the epoch of neoliberalism it achieved great strides in this by reducing labor power through union busting by both thatcher and reagan in the UK and US respectively. it has also effectively curtailed any increase in the minimum wage for nearly 20 years as well as reduced protections, regulation and prosecution for wage theft and overtime pay violations which it maintains as exclusively as civil matters while ensuring theft itself from a merchant in turn is always a criminal matter through the primacy of private property. to learn more i recommend reading Marx's "Das Kapital," albeit its rather academic. Engels "wage labor" is also a good read to understand why housing is so persistently unaffortable but helps to understand why any other good or service slowly becomes so as well.

mrtksn

And yet for some reason all the algorithmic pricing targets the laborers, when apps hunt for whales they target teenagers. Ridiculous. There is a need for proper pricing for the rich, i.e. Elon can pay a million dollars per meal. Someone is leaving money on the table.

ThrowawayIP

Okay, so say AI & MBAs are successful in replacing the labor spend of corporations on every level? What happens to "the economy"?

sigmoid10

Yikes. Good to know that labor shares used to rebound after crises, but since the 2000s and the dotcom bubble it has basically been downhill only. So don't expect any of this to get better unless we roll back technology to the last millenium.

clusterhacks

FTA's conclusion: "Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. <later> ... and they provide little evidence that it will evolve differently from past episodes." This conclusion seems to be against "this time is different" arguments. Should we be generally encouraged by similarity to past declines pre-2000 or bearish and think that there is more drop to come like the 2000-2007 and 2007-2019 periods they graph out? I guess there is no way to predict other than check back in after time passes.

simianwords

I find this metric misleading. Where is the extra money going? To whom? Turns out most of it is not going to billionaires. Bulk of it is going to future investments. If we choose not to do that, we lose out on future gains.

crossbody

What happens if large cohort of Boomers retires and stop working, instead living on their savings? Labor share of income drops. If you remove this effect, the labor share of income is flat - confirmed by last week's analysis in The Economist.

hash872

I don't have time for a longer comment, but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates. The doctor, lawyer, financial advisor, CPA etc. that in past decades would have had his/her income run through a W2 arrangement shifted to becoming a one-person corporation

balozi

For what its worth Ross Perot had an ominous take on the effects of free trade back in the 90s with his "giant sucking sound" observation.

nradov

The actual labor share of income is significantly higher when you include employer contributions to employee health insurance premiums. Healthcare costs have been rising faster than overall inflation for decades, and while many of those costs are passed on to employees the employers have also absorbed a significant chunk. If we want to increase the labor share then we'll drive down healthcare spending. And no, there's no simple solution to this problem. The notion that something like "Medicare for All" would solve the problem is a total fantasy, disconnected from actual US healthcare economics. Any real solution will have to work on multiple angles including preventive care, PBMs, provider wages, rationing, drug prices, fraud, malpractice insurance, interoperability technology, etc.

Karthick81

Could it be because the productivity is up?

noahbp

That most-recent spike during/post-COVID really puts into perspective just how unreasonable low-wage employers were to be so hysterical.

TrackerFF

Obviously the solution here is for workers to also become shareholders.

jcfrei

I think this is part of a long term development where technology and globalization slowly erode workers bargaining power. Basically you only build a factory in the US if you can keep labour costs low enough and the manufacturing automated enough so that you can still compete with other manufacturing hubs.

legitster

People are misreading the conclusion - the Covid related drop is normal and matches previous episodes, but the massive overall drop since 2000 is not. The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.