NBC News Report of American Worker Share of the Pie

Investment Analysis Clubs Macro Economic Trends and Risks
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https://archive.is/xsfPf#selection-1357.0-1357.68

Since 2000, the value of the S&P 500 stock index has gained about 600%. Over the same period, inflation-adjusted worker earnings have climbed just 12.5%.

It is now the least rewarding time to be a worker in the U.S. economy since the government started keeping track.

The share of economic growth captured by labor in the form of compensation like wages fell to a record low last quarter, hitting 52.8%, according to the Bureau of Labor Statistics, which began recording the statistic in 1947.

The data comes as stock prices continue to hover near all-time highs, while wage growth is barely keeping up with inflation.

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Less than 1/2 percent per year of wage growth over that time. The wonder is not why Trump was elected. The wonder is why any of them ever thought he would do anything beneficial for them.

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Sadly, I’m afraid his voters were less about what he would do for them than what he would do to others.

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Because they had been ignored by both political parties for 25 years perhaps. And they took a chance.

Yes there was an element of that. They had a hope the pain would be spread amongst more Americans.
Nope. the elite & wealthy continue to reap the returns.

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Since 2000, how much has the economy grow? 600%?

GoogleAI:

No, the economy has not grown by 600% since 2000. The U.S. economy has grown by approximately 74.9% in real terms (adjusted for inflation), while its nominal gross domestic product (GDP) grew from $10.25 trillion in 2000 to about $32.38 trillion, marking a 215.9% nominal increase. [1, 2]

To see how that growth compares over time, here is a breakdown of the U.S. economic expansion:

Economic Metric Year 2000 Current Level Total Growth
Real GDP (Inflation-adjusted) ~$13.88 Trillion ~$24.27 Trillion 74.9%
Nominal GDP (Current prices) $10.25 Trillion ~$32.38 Trillion 215.9%

While the economy has more than tripled in raw dollar terms due to a mix of production and inflation, a 600% explosion in overall economic output has not occurred. The only entities seeing that level of hyper-growth over this timeframe are specific emerging markets like China, which expanded its economy by a factor of nearly 17 since the turn of the century. On a global scale, the total World Nominal GDP rose from roughly $33 trillion in 2000 to around $115 trillion, which is a growth of roughly 250%. [1, 2]

If the stock market grew by 600% while the economy only grew by 250% what really happened? Some call it a bubble. Is a bubble real wealth?

Suppose a company worth $1 million does an IPO issuing 100,000 shares at $20. Investors just gave the company $2 million but no wealth was created, money just changed hands, $2,000,000..

The next day the stock closes at $30. No wealth was created, money just changed hands. By the logic of the article workers should gave gotten a 50% raise!

But wait, what if only one share was traded? Only $30 changed hands… How does that justify raising all salaries by 50%?

Mark Twain has the answer to the puzzle, “Lies, damn lies, and statistics!”

The Captain

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American workers are getting the smallest slice of the pie on record
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The Stock

Market not the US economy.

So you change the argument to the US economy from the US stock market.
But still: US economy 74.9% in real terms and inflation-adjusted worker earnings have climbed just 12.5%
There are some disparate uneven figures there.

The blue collar working has taken it good and hard for 25 years since NAFTA and transfer of manufacturing overseas. And it has had political consequences but none on foreign interventionism by the USA. The most recent adventure in Iran has had macroeconomic impact upon the world & within the USA.

Come on Captain! Just the CEOs are benefiting.

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Workers paid in stock options aren’t?

The Captain

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A few. We know where the largesse flows.

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But is that why this is happening?

A big part of this shift is technology, not merely outsourcing. It takes fewer workers to make more stuff. Machines are getting better at producing economic value. Not just the super fancy Humanoid Robots Of The Future, but just ordinary machines.

For this perspective, consider the following:

Opinion | Why Labor’s Share of Wealth Is Shrinking - The New York Times

That economist looked at labor share of economies across the globe, and found that this is happening in most of the world, regardless of the trade regime or labor protections. What it correlated most strongly with, in their findings, was how cheap computing and communications were. In most advanced economies, where you can substitute increasingly capable machines for labor, you saw the larger declines in labor share.

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A big surprise a professor of economics at the University of Chicago will take this viewpoint. Likely a disciple of Uncle Milty.
A rejection of Keynesian theories that arose during the 1973–75 recession, which was largely triggered by the 1973 oil crisis and gained favor. They’re big monetarists likely in favor of the Federal Reserve QE & deregulation since the 1990’s.
Economic theories that aid the flow of money upward.

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Perhaps not, but it does seem to be true. Labor share of the economy has been shrinking over the long term across the globe. Globally, labor share has dropped about six to eight percentage points compared to the long-term historical norms. It’s not just the U.S. The U.S. took a bit longer to “catch up” (the EU apparently suffered their bigger declines before 2000, while we had ours between 2000 and today), but almost everywhere you’ve seen a reduction in the proportion of national economies going to labor. From the mid 60’s around the world back in the 1980’s, to the mid 50’s today.

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Humans have been inventing Labor Saving Devices from very early on, spears, arrows, windmills, Archimedes’ screw, wheels, domesticated animals, printing press. Labor grows and shrinks in waves, waves that become steeper and steeper. In time labor will shrink to nothing but hobbies.

The Captain

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I’ve read several articles over the past few years that say that onshoring is happening. But it isn’t translating to US jobs because machines are doing it. The machines, even in the US, are cheaper than third world labor. When they’re cheaper than a Bangladeshi making $5 per day, what chance does US labor have?

Andrew Yang was right. He was just a bit too early. People weren’t willing to accept a UBI. Soonish, they will have to rely on it to survive. The top few percent hoarding all the wealth isn’t going to go over well, either.

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He may be right that we need it for most people to survive. But how are you going to make it happen? Seriously. The billionaires right now don’t want to pay living wages for the people who trade their work for money. Why would they just give people money when they aren’t employed by them any longer? Fundamentally it makes zero sense. They aren’t going to do it. They COULD do it right now, increase wages and give better benefits to the people from whom they get actual value from - their employees. But when people aren’t even their employees anymore, somehow, magically, UBI? Right.

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American workers have been getting a raw deal since Reagan was elected in 1980.

intercst

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Because the billionaires still need a market for the goods and services they produce, and the most clever among them will get almost all of the UBI back. UBI is just another tax subsidy for the wealthy because it’s all going to be spent on the goods and services produced by the wealthy.

Walmart is making billions of dollars a year off food stamps and Medicaid benefits for its employees.

intercst

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Government has to do it, and that means taxes. Very progressive taxes, like before Reagan took office and reduced the maximum tax bracket. And get that generational wealth (estate taxes, etc).

The alternative is various dystopian sci-fi stories, like the “scoops” from Soylent Green, as well as history (like the French Revolution…“let them eat cake” won’t fly). It would be simple self-preservation for the billionaires. Otherwise the pitchfork-wielding mobs will drag out some guillotines.

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But they could do that today, and avoid the pitch forks. THAT IS MY POINT.

“All you had to do was pay us enough to live”.

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It’s still a competitive market today, so they’ll pay the lowest wage. But once the consumer market dries up because fewer people have jobs, they have to find some way to put money back in the pockets of the consumers.

The consumer economy catering to the Top 10% isn’t enough to keep the overall economy functioning.

intercst

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They aren’t motivated yet, because the threat isn’t imminent. When the pitchforks come out, that is existential for them (and also probably too late). Government needs to interdict before it gets to that level, and (as I said) it’s still probably a little too early. Give it 10 years and Andrew Yang might have a shot. Billionaires will hate it, but there may be enough support that even they can’t buy their way out of it.

Pink Floyd had it right. https://www.youtube.com/watch?v=-0kcet4aPpQ

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