An alarming snapshot of long-term economic trends
Companion charts, drawn with data compiled by the St. Louis Federal Reserve and put together by Henry Blodget of Business Insider:
First, after-tax corporate profits as a share of gross domestic product:
Second, employee wages and salaries as a share of gross domestic product:
You can draw a variety of lessons and conclusions from such charts. But I’ll start with three:
1.) The notion that corporations are overtaxed and overregulated and can’t turn a profit is simply absurd. The whines of victimization from our titans of business have no basis in reality.
2.) The Great Recession, as tough as it is, does not account for the trends, which have occurred over several decades.
3.) You could argue that if the share of GDP devoted to wages and salaries has fallen to a record low, it’s because American workers have grown lazy and stupid. Given that the two charts change right around the time of Ronald Reagan’s inauguration, you could also argue that it is somehow being driven by changes in government policy.
I think both interpretations in Point 3 are wrong. The charts document a profound, permanent and probably ongoing shift of bargaining power from the employee to the employer, a shift that has been driven largely by synergies between technology and globalization, with government policies playing a minor role at best.
The question is what, if anything, we do about it.
– Jay Bookman
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236 comments Add your comment
Stevie Ray..Clowns to the left and Jokers to the right..here I am...
June 25th, 2012
10:29 am
Peadawg,
What was the ruling?
Steve
June 25th, 2012
10:30 am
Ben, all strawman arguments.
Obamacare is all about propping up the PRIVATE INSURANCE INDUSTRY.
Social Security – the wealthy are capped at 106K for what they put in, so please – they are not paying for this WE ARE
Public schools are failing because property taxes are so low in conservative areas that the schools are underfunded and setup to fail, where the wealthy can send THEIR kids to the nice private schools.
Ben Shockley
June 25th, 2012
10:30 am
“Ben, you kill me. Use the googles. What do you think tax cuts on the wealthy and anti-union legislation do?”
“Ben, what do you think tax cuts on the wealthy and gutting spending on unemployment, medicare, and social security mean and do?”
Steve, you kill me. How does raising taxes on the rich help the middle class? How does overcharging taxpayers for the services of thug public sector unions help the middle class? How does joke social security ponzi scheme help the middle class?
Ben Shockley
June 25th, 2012
10:30 am
“Obamacare is all about propping up the PRIVATE INSURANCE INDUSTRY”
LMAO!!!
Ben Shockley
June 25th, 2012
10:31 am
“Public schools are failing because property taxes are so low in conservative areas that the schools are underfunded and setup to fail, where the wealthy can send THEIR kids to the nice private schools.”
We spend more per student than we ever have on our country’s history, even after adjusting for inflation.
Funding ain’t the problem. You lose again.
Gordon
June 25th, 2012
10:31 am
Paul@10:23,
I would sure like to see some examples of that. I doubt that is the case the vast majority of the time.
Ben Shockley
June 25th, 2012
10:33 am
“Social Security – the wealthy are capped at 106K for what they put in, so please – they are not paying for this WE ARE”
They are also capped at the same joke $1500/month benefit, or whatever it currently is. So teh guy making over $106K is paying in double for the same benefit as the guy making $50K. The wealthy are subsidizing the less wealthy. As usual.
Ben Shockley
June 25th, 2012
10:33 am
Steve, what was your impression of the middle class voters in wisconsin, and their views on government workers union?
Peadawg
June 25th, 2012
10:33 am
Stevie, they threw out a lot of the law saying immigration enforcement is the federal gov’t job.
but, “the Court did uphold one the most notorious provisions: A requirement that local police officers check a person’s immigration status while enforcing other laws if “reasonable suspicion” exists that the person is in the United States illegally.”
Steve - USA ("None of the Above")
June 25th, 2012
10:34 am
Ouch. Ben Shockley is giving Steve a beat down. I hope Steve has insurance.
Ben Shockley
June 25th, 2012
10:35 am
Steve, I gotta get back to earning my 6-figure salary. You keep on hatin’ on rich people and see how far that gets you in life.
Good luck.
Grasshopper
June 25th, 2012
10:35 am
“Grasshopper, there is no logical linkage whatsoever.”
Says who?
Joe Hussein Mama
June 25th, 2012
10:38 am
B. Shockley — “Steve, I gotta get back to earning my 6-figure salary.”
Is THAT how much pharmaceutical testing volunteers are getting these days?
josef
June 25th, 2012
10:42 am
Doggone
I know you and a lot of others have a problem with that concept of 150 years of occupation. It just don’t sound good. But it is nonetheless a factor. The policies and the reactions to them are at the base of what you are trying to ameliorate. Slavery, segregation, occupation and reeducation lie at the very heart of why these sections of the country remain so skeptical of anything from outside, even when it is in their own best interest. You can ignore it, but it doesn’t go away.
Grasshopper
June 25th, 2012
10:42 am
Great. I’m hung up in limbo for expressing an honest viewpoint.
Grasshopper
June 25th, 2012
10:43 am
Too many links maybe? One at a time then.
http://www.huffingtonpost.com/2011/09/15/single-mothers-poverty-no-jobs_n_964500.html
Grasshopper
June 25th, 2012
10:44 am
http://www.dispatch.com/content/stories/local/2010/10/04/unwed-moms-far-more-likely-to-face-poverty.html
Steve - USA ("None of the Above")
June 25th, 2012
10:44 am
JHM – “Is THAT how much pharmaceutical testing volunteers are getting these days?”
That was funny.
JamVet
June 25th, 2012
10:44 am
Grasshopper, there is no logical linkage whatsoever.
Man, is that being gracious!
That is the most irrational post I’ve read in ages.
These guppies will say ANYTHING to not address the root causes of this problem.
Because it would require them to admit that they have been dead wrong about what they desperately want to believe…
Redneck Convert (R--and proud of it)
June 25th, 2012
10:45 am
Well, I see the Activist U.S. Supreme Court struck down most of the Arizona immigration law. This is one reason why we need to be able to secede from this country. I sure hope they ain’t Activist with the health care law.
Activist—ruling against the way us Conservatives want them to rule.
Doing Their Constitutional Duty—agreeing with us Conservatives.
Grasshopper
June 25th, 2012
10:46 am
http://thesocietypages.org/socimages/2012/02/27/poverty-single-mothers-and-class-mobility/
Stevie Ray..Clowns to the left and Jokers to the right..here I am...
June 25th, 2012
10:47 am
Ben,
I’m wondering about the efficacy of comparing our test results to the 16 or so countries who outperform us…seems those countries have a fraction of the kids to educate and the idea that on the benchmarks tested, it is unreasonable to compare us to them…
Not suggesting our education system is not in need of overhaul but the constant comparison to much smaller countries is ridiculously misleading. IMO we should go to a more trade based and technology based education cirriculum that is more practical relative to job skills needed presently….unions will of course impede any such changes as the status quo serves them well..
Joe Hussein Mama
June 25th, 2012
10:50 am
Grasshopper — “Too many links maybe?”
The automatic bluenose does not like more than two links in a single post IIRC.
Stevie Ray..Clowns to the left and Jokers to the right..here I am...
June 25th, 2012
10:51 am
Too bad Obama and worthless folks in congress couldn’t agree on the Federal Immigration policy to keep this kind of crap out of the courts…lack of leadership and further evidence that both parties are more concerned serving those who contribute big money as opposed to us taxpayers…
Moderate Line
June 25th, 2012
10:57 am
I think both interpretations in Point 3 are wrong. The charts document a profound, permanent and probably ongoing shift of bargaining power from the employee to the employer, a shift that has been driven largely by synergies between technology and globalization, with government policies playing a minor role at best.
++++++
I agree but would add two other things to the picture. One is the switch from service based economy from industrial. In a service base economy people are freer to change jobs because there are more employers but the market place determines the salary where in industrial economy the employer had to negotiate with the employer. Another problem is a greater emphasis on individualism compared to the past. The left focuses on social individualism and the right focus on economic individualism. Individualism basically benefits those who already have power, money and beauty. Libertism even though it is losing politically it is winning philosophically. People want more freedom with fewer obligations. I don’t want you to tell me who I can sleep with or what to do with my money.
Paul
June 25th, 2012
11:03 am
Gordon
As I said, it was previous thread and discussed quite at length. Examples given were some of the larger Fortune 500s that Jay kicked off the thread with. But you can run the numbers, also. Just have to be careful how the total comp package is figured and under total employees, if it’s full-time equivalents or lists part-time employees in with full time.
Going upstairs.
stands for decibels
June 25th, 2012
11:10 am
I don’t do this often, but
$1500/month benefit, or whatever it currently is.
Idiot.
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/5/~/maximum-social-security-retirement-benefit
stands for decibels
June 25th, 2012
11:12 am
And I’m only bothering to point out the idiocy in this dead thread because “Ben” harbors illusions that SS is somehow a bad deal for participants, even though I’ve called him out and corrected him repeatedly.
back upstairs…
209 more days
June 25th, 2012
11:57 am
Even more important than the Az law ruling, the Eleventh Circuit is the law – making clear that Lake Lanier can indeed be used for water supply for Georgia.
Tom Middleton
June 25th, 2012
12:53 pm
I believe you recently wrote a piece, Jay, about successful venture capitalist Nick Hanauer and his new book “Garden of Democracy.” And in it, he describes a capitalist economy, our “garden” if you will, as needing demand first to grow, not supply.
In other words, it’s those who spend money who actually create the jobs with their spending, not the supply-siders, who are only going to wait and see which goods and services are selling.
It’s kind of a no-brainer, I know, but we’re currently in an election cycle in which a whole political party doesn’t seem to get this and apparently never will – the Republicans.
And if they win and continue giving huge tax breaks to the wealthy and taking money from we poor and middle class – the most of us and ones who actually do most of the spending – well, it’s just going to be more of the same sluggish economic growth, maybe even less.
So what to do? We The People need to plan to vote this November and put representatives in power who really do understand how an economy works, not just tell us they do so they can get themselves elected.
By that, of course, I mean we need a demand-side economy for a change and government that will help us get one, not a continuing supply-side that will give us at best your charts!
Mark in mid-town
June 25th, 2012
1:25 pm
The most reasonable conclusion to draw from the data Jay provided is that there is not as much competition among business owners as there was before. This lessoning of competition means that profits for existing companies can be high at the same time employee compensation can be low. Now, what are the reasons for this lessoning of competition? Might a primary reason be that it’s far more difficult to get a viable business off the ground than before? This would be where onerous regulations come into play. Has Sarbanes Oxley contributed to making it more difficult for a business to get off the ground. How about the multitude of other regulations which have been implemented,a nd the fear of future regulations? I think it’s telling that Bernard Marcus, one of the co-founders of Home Depot, has said that it’s doubtful Home Depot ever could have gotten off the ground had the regulatory environment been as oppressive as it is today.
Welcome to the Occupation
June 25th, 2012
1:36 pm
Jay: ” a shift that has been driven largely by synergies between technology and globalization, with government policies playing a minor role at best.”
This interpretation is badly mistaken, Jay. These “synergies” between technology and globalization have EVERYthing to do with policy. Which is not the same thing as saying that policy has controlled these trends in every detail. It’s just to point out that policies – from the takeover of the Fed’s mission in the late 70s (to fight inflation and to hell with employment), to the wrecking of labor in the country, deregulation, and on up finally to the hollowing out of manufacturing with the last vestiges of the 20th C full employment social model – had everything to do with the changes we’ve seen.
Just remember, NAFTA was avidly pushed, and ultimately passed, by a Democratic president without very much public debate considering its vast implications on our society, not to mention the world.
You can argue that given the crisis of capitalism and profits in the 1970s and the destabilization of America’s role as the center of world finance, with the dismantling of Bretton Woods, etc., that policies of this type were unavoidable, but to argue that there simply weren’t any policies and that all that has happened has been simply the ‘natural’ working out of the system, is misguided and inaccurate.
Mary Elizabeth
June 25th, 2012
2:36 pm
When I started my teaching career in the South, I recognized that to support the prospect of a teacher’s union in Georgia was unthinkable because of fear of job loss from superiors in educational circles. There were two local teacher’s professional organizations in DeKalb County. One was created for the purpose of disassociation with the national NEA. It was supported by the powers-that-be.That one was the “acceptable” and safe teacher’s professional organization to join, instead of the other local teacher’s professional association, which was associated with the NEA. There was an understood rejection toward joining forces with the NEA, at that time in DeKalb County, because of fear of “unionization” (although the NEA is not a teacher’s union, technically, it did, and does, offer worker support and protection).
The South, even in its Antebellum days, was paternalistic in nature – toward women, toward African-Americans, and toward dissent of any nature that did not serve the financial interests of those who were in power or toward dissent which broke from the long-accepted social mores of the region (the opposite of egalitarianism). Submission to the power structure of the region was ensured because of the need to survive economically, in an unjust and repressive society. Re-education would not have helped, at that time, because economic security, or survival, was more important than education.
Thank you for your post at 1:36, Welcome to the Occupation. I agree with most of your thoughts.
Mary Elizabeth
June 25th, 2012
4:27 pm
Post Script: In my 2:36 pm post, I was obviously referring to “re-education” in the sense of educating Southern workers to the value of unions for their benefit, not the reverse. However, the power structure in the South has had a history of being so paternalistic, and so oppressive, toward persons lower on the power hierarchy, that workers would not have dared to risk voicing their support of unions, even if unions ultimately would have been of benefit to them, because their job security would have been forfeited. My teachers’ union illustration, above, was only one example of how Southern power structure could impose its will on workers.
ld
June 25th, 2012
10:40 pm
Reagan policy: union busting; illegal amnesty; relaxed regulation/oversight……
“trickle down economics” for the employee/consumer class =
“pi$$ on ‘em economics”.
An alarming snapshot of long-term economic trends | Jay Bookman | Income Tax Guide
June 26th, 2012
12:42 am
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