Study on the growing wealth gap in the US?

Question

I pulled some indexed labor data from the Bureau of Labor Statistics and posted it on my 360 blog thing here. Please take a look at my blog entries, and I am interested in having a dialogue about this. My position is that there is no reasonable justification for the wealth grab that the data reveals.

Some highlights:

+ Output per hour is up more than 260%.
+ Hours worked is up 90%. This is hard to believe, begs further investigation.
+ Output per hour multiplied by hours worked, the total output nut, is up 580%.
+ Hourly compensation is up 170% (on real basis)
+ Labor’s share of productive output has fallen 4%. From what initial % is unknown.
+ Non-Labor Share of productive output (re: Profits) is up 4,042%.

Roadkill -- all metrics are on real terms, inflation has been removed as a variable.

Both great answers. It is true there are many complications and the presentation of the data by BLS does not lend itself to clarity and precision. Automation is in the productivity per hour measure. Executive pay including bonuses, and also medical coverage and other bennies are in the total compensation nut. The true definition of "hours worked" is unknown, as no definition exists in the BLS glossary.

So, all valid complications. I would argue, though, that the magnitude of the relative changes is so extreme that these clarification will not obviate the main story -- wealth transfer from labor to ownership.

Answer 1

Hard to tell what the magnitude is unless all values have been adjusted for inflation could be some is just inflation.

But just from what you have presented I would say there is a perfectly reasonable explaination for the increases that has nothing to do with a wealth grab.

Increased output - does that mean people are working harder not necessarily could be due to increases in automation. The classic example is a man with a shovel and a man with a bulldozer which one gets the most done per hour. And who bought the bulldozer.

Hours worked is up 90% if your talking about the same number of people that would put us all at 76 hrs per week. I know thats not happening to most people so just means more people are working. (Don't see why that would be a problem)

Out put is up 580% with or without inflation thats a big number. That's why we are the richest nation on earth.

Hourly compensation up 170% assume the real basis means adjusted for inflation. That is a good thing as well.

Labors share of productive output has fallen 4%. Here again is good news. With productivity up 260% probably due to capital improvements (people are not working 260% harder). that means labor input has fallen by more than 1/2 , (1/2.6) and yet their share of profit has only fallen 4%.

So the investors make an additional 4% after their capital investments which purchased the bulldozers, increased the output by 580%, and almost doubled the number of jobs.

If I was one of the investors I don't know that I would risk my fortune for an extra 4% given lawsuits, phony workmens comp claims and the like. You start messing with that and the next thing you know the bulldozers will be shovels and you'll be worse than when you started.

Answer 2

There is a whole branch of economics devoted to questions like this. It is called "Labor Economics" ... amazing, eh?

If your really serious at looking for the reasons why things are the way they are, pick of something like the "Journal of Labor Economics" or take a course on labor economics at your local college. I'm currently taking a grad course in labor and the issues are fairly sophisticated as you take a closer look.

You may not like all the justifications, but you'll be suprised to find that wealth is necessary for a growing economy and wages are generally justified by productivity of labor. I would agree that poverty is a huge issue, but it is diffcult to find efficient mechanisms to address poverty. Finally, being "poorer" in this country is often a choice, there are plenty of people who choose against the big buck. I could be earning 30k more in different a field, so I really don't envy people making more than me.