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Sun Jan 13, 2013, 07:14 AM

Wages have fallen to a record low as a share of America’s gross domestic product.




Until 1975, wages nearly always accounted for more than 50 percent of the nation’s G.D.P., but last year wages fell to a record low of 43.5 percent. Since 2001, when the wage share was 49 percent, there has been a steep slide.

“....We went almost a century where the labor share was pretty stable and we shared prosperity,” says Lawrence Katz, a labor economist at Harvard. “What we’re seeing now is very disquieting.” .... The share of wages going to the top 1 percent climbed to 12.9 percent in 2010, from 7.3 percent in 1979.....

From 1973 to 2011, worker productivity grew 80 percent, while median hourly compensation, after inflation, grew by just one-eighth that amount, according to the Economic Policy Institute, a liberal research group. And since 2000, productivity has risen 23 percent while real hourly pay has essentially stagnated. Meanwhile, it’s been a lost economic decade for many households. According to the Center for Budget and Policy Priorities, median income for working-age households (headed by someone under age 65) slid 12.4 percent from 2000 to 2011, to $55,640. During that time the American economy grew more than 18 percent.

Emmanuel Saez, an economist at the University of California at Berkeley, found that the top 1 percent of households garnered 65 percent of all the nation’s income growth from 2002 to 2007, when the recession hit. Another study found that one-third of the overall increase in income going to the richest 1 percent has resulted from the surge in corporate profits.

MANY economists say the stubbornly high jobless rate and the declining power of labor unions are also important factors behind the declining wage share, reducing the leverage of workers to demand higher wages. Unions represent just 7 percent of workers in corporate America, one-quarter the level in the 1960s.


http://www.nytimes.com/2013/01/13/sunday-review/americas-productivity-climbs-but-wages-stagnate.html?_r=0



One can not ignore the negative effects of Costly Trade Deals, and the slashing of tax rates of corporations and the ultra-rich.


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Reply Wages have fallen to a record low as a share of America’s gross domestic product. (Original post)
grahamhgreen Jan 2013 OP
dipsydoodle Jan 2013 #1
HiPointDem Jan 2013 #2
dipsydoodle Jan 2013 #4
lrellok Jan 2013 #6
Skittles Jan 2013 #13
burnsei sensei Jan 2013 #3
cantbeserious Jan 2013 #8
4dsc Jan 2013 #5
cantbeserious Jan 2013 #7
Agony Jan 2013 #9
grahamhgreen Jan 2013 #17
progressoid Jan 2013 #10
pediatricmedic Jan 2013 #11
pampango Jan 2013 #12
grahamhgreen Jan 2013 #16
bubbayugga Jan 2013 #14
lpbk2713 Jan 2013 #15

Response to grahamhgreen (Original post)

Sun Jan 13, 2013, 07:33 AM

1. That doesn't seem to account for changes in technology

which have reduced the need for labour in some industries.

That is in relation to the statement "Wages have fallen to a record low as a share of America’s gross domestic product"

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Response to dipsydoodle (Reply #1)

Sun Jan 13, 2013, 07:42 AM

2. technology is irrelevant to the fact that workers are taking home less of the value of production

 

than ever before in the history of the US, and capital is taking a bigger share than ever before.

technological change is constant; this is unprecedented.

and the root cause of all our ills.

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Response to HiPointDem (Reply #2)

Sun Jan 13, 2013, 07:49 AM

4. The statement to which I referred is an aggregate one.

and I didn't chose the tile of the OP.

With reference to changes in technology : Ford T and A models were all hand produced - no robots. Are you saying all current US production of cars remains like that ?

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Response to dipsydoodle (Reply #4)

Sun Jan 13, 2013, 08:41 AM

6. Goggle "Luddite" and think a while

If people where complaining about machines lowering wages in 1812, one would think they would have manifested long before now. If we are just seeing wages go down today, you kinda need to explain why the last 200 years of machines did not do this and these new ones are.

Second, those periods with the largest capital investment as a share of GDP also match the periods where wages are rising, not falling. If technology was replacing labor, capital investment would be inverse to wages, not match them.

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Response to lrellok (Reply #6)

Sun Jan 13, 2013, 11:46 PM

13. excellent response, Irellok!

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Response to grahamhgreen (Original post)

Sun Jan 13, 2013, 07:43 AM

3. And the claim everywhere is:

WE VALUE WORK!
To have a job is the ultimate virtue!
Yeah, right. As I've written before, the U.S. is the most self-deceived society I've ever seen.

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Response to burnsei sensei (Reply #3)

Sun Jan 13, 2013, 09:30 AM

8. Better Yet - Per Dubya - Having Two Or Three Or Four Or More Jobs Is Nirvana

eom

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Response to grahamhgreen (Original post)

Sun Jan 13, 2013, 08:38 AM

5. 30 years of failed conservative economics at work here..

Its amazing how they put the stats out for everyone to see and yet some people still vote against their own economic interests.

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Response to grahamhgreen (Original post)

Sun Jan 13, 2013, 09:28 AM

7. 30 Years Of Reaganomics Stuffing The Pockets Of The Ultra Wealthy

eom

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Response to grahamhgreen (Original post)

Sun Jan 13, 2013, 10:37 AM

9. "There is no economic law that says that everyone, or even most people, automatically benefit from

technological progress." We need better economists and leaders then. Our winner-take-all "exceptional" system needs a do-over.

http://www.theatlantic.com/business/archive/2011/10/why-workers-are-losing-the-war-against-machines/247278/1/
"""
At least since the followers of Ned Ludd smashed mechanized looms in 1811, workers have worried about automation destroying jobs. Economists have reassured them that new jobs would be created even as old ones were eliminated. For over 200 years, the economists were right. Despite massive automation of millions of jobs, more Americans had jobs at the end of each decade up through the end of the 20th century. However, this empirical fact conceals a dirty secret. There is no economic law that says that everyone, or even most people, automatically benefit from technological progress.

People with little economics training intuitively grasp this point. They understand that some human workers may lose out in the race against the machine. Ironically, the best-educated economists are often the most resistant to this idea, as the standard models of economic growth implicitly assume that economic growth benefits all residents of a country. However, just as Nobel Prize-winning economist Paul Samuelson showed that outsourcing and offshoring do not necessarily increase the welfare of all workers, it is also true that technological progress is not a rising tide that automatically raises all incomes. Even as overall wealth increases, there can be, and usually will be, winners and losers. And the losers are not necessarily some small segment of the labor force like buggy whip manufacturers. In principle, they can be a majority or even 90% or more of the population.

If wages can freely adjust, then the losers keep their jobs in exchange for accepting ever-lower compensation as technology continues to improve. But there's a limit to this adjustment. Shortly after the Luddites began smashing the machinery that they thought threatened their jobs, the economist David Ricardo, who initially thought that advances in technology would benefit all, developed an abstract model that showed the possibility of technological unemployment. The basic idea was that at some point, the equilibrium wages for workers might fall below the level needed for subsistence. A rational human would see no point in taking a job at a wage that low, so the worker would go unemployed and the work would be done by a machine instead.
"""

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Response to Agony (Reply #9)

Mon Jan 14, 2013, 02:59 PM

17. Yet the barrier to a higher education grows exponentially (chart)




Free higher education would make great stimulus!

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Response to grahamhgreen (Original post)

Sun Jan 13, 2013, 11:00 AM

10. Oh, c'mon people. Give it a couple more years and it'll start trickling down to us.

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Response to grahamhgreen (Original post)

Sun Jan 13, 2013, 11:12 AM

11. It is mostly the trade deals causing a decline

Tax rates on the corporations and ultra rich really have very little effect on this.

The average global wage is about $3 to $4 an hour, that is how far we have to sink. Guess who has signed a bunch of new trade deals?

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Response to pediatricmedic (Reply #11)

Sun Jan 13, 2013, 03:42 PM

12. The decline preceded the trade deals by 20 years. And countries with a stronger middle class

have more trade than the US has as a percentage of their economies.

And yes, progressive tax rates on the rich and corporations is important in providing an equitable distribution of income. That actually was the case in the US in the past and is still the case in the rest of the developed world.

Stronger middle classes in Europe, Canada and Australia are not the result of trade restriction but of progressive taxes, strong union and an effective safety nets. They have not achieved a greater level of middle class prosperity by walling themselves off from the world's poor (which is hardly a progressive policy anyway) but my taking care of their own people.

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Response to pampango (Reply #12)

Mon Jan 14, 2013, 02:54 PM

16. The costly trade deals, obviously cost jobs and allow employers to pay people less, that's

why they want them!

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Response to grahamhgreen (Original post)

Mon Jan 14, 2013, 12:17 AM

14. The lowest bidder global economy has created a race to the bottom.

 

We all know the story and nobody in power has a plan to fix it anytime soon.

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Response to grahamhgreen (Original post)

Mon Jan 14, 2013, 12:22 AM

15. The GOP can claim a victory in their war on the Middle Class.




As I'm sure they will.

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