- Workers’ share of national income stands at 57 percent, an all-time low
- Despite striking productivity growth, workers’ pay has gone nowhere
- Third-quarter profits were 19.4 percent above their pre-recession peak
Any economist will tell you that productivity—output per hour worked—is the key to higher living standards. Given more capital equipment, improved technology, and sharper skills, the same number of workers can produce more, generating more national income and a bigger economic pie for all to share. Much was the case during the technology-fueled surge in productivity during the 1990s. Right now, however, you’ll have a hard time selling the virtues of productivity growth to American workers. Although productivity over past decade has grown even faster than it did in the 1990s, workers are losing ground—and at a record pace.
It’s a stunning reversal of fortune that may
well be the key trend underlying
much of the anger expressed by
the Occupy Wall Street crowd.
In short, Americans are working harder with less to show for it, based on the breakdown of national income, which is the total of all income generated by labor and capital in the production of goods and services, including salaries, employee benefits, profits, rents, interest, and dividends. Over the past decade, the share of national income going to workers—salaries and benefits—has fallen sharply to an all-time low of 57 percent in the third quarter. On the flipside, the share going to capital has surged to an all-time high, with the chief beneficiary being profits. It’s a stunning reversal of fortune that may well be the key trend underlying much of the anger expressed by the Occupy Wall Street crowd.