Thursday, June 16, 2011

Staggering decline in workers’ share of U.S. national income in 20 years

Under the title of Human Rights for Workers, my blog lists its major theme: “How our global economy undervalues work and working people.” Now I have firm statistical proof how scandalously the United States, the major force in the global economy, has been undervaluing its own working men and women over the past 20 years.

An AFL-CIO blog headline June 14 on how the workers’ share “nosedives into the lower depths” caught my eye. So did an accompanying chart illustrating the trend in a striking way. I was particularly anxious to get a clearer chart.

By searching three or four hours, I finally found the original chart on the Website of the St. Louis Federal Reserve Bank. Here it is:

The AFL-CIO blog discovered the chart at another blog, Talking Point Memo, and commented that TPM’s analysis “pretty much says it all.” For example:

Workers tend to bear the brunt of the American economy's boom and bust cycles. When recessions hit and unemployment rises, workers' share of the national income -- the money people earn through wages and salaries, as opposed to corporate profits and capital gains -- tends to decline. And when the economy recovers, workers' portion of the country's income rebounds to somewhere around its level prior to the recession.

At least that's how it went in the 20th century. But since the recession of the early 2000s, we've seen the decline without the recovery -- even after the recession ended, workers' portion of national income continued to drop consistently, declining up to and through the recession of the late Bush and early Obama years. Which raises the question: Has the economy changed in a fundamental way that will prevent workers from enjoying the benefits of the current incipient recovery?
Missing from that analysis, in the AFL-CIO view, was “that CEO pay has skyrocketed --with CEO’s of the largest companies receiving, on average, $11.4 million in total compensation in 2010.”

The St. Louis FRB article where I found the original chart had no direct analysis on it. None that I can remember. I couldn’t find the article again. I gave up quickly, after only two or three minutes.

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