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Posted by loughnane 3 hours ago

The labor share of income in the US is at its lowest post-war level(libertystreeteconomics.newyorkfed.org)
370 points | 350 commentspage 2
jcfrei 3 hours ago|
I think this is part of a long term development where technology and globalization slowly erode workers bargaining power. Basically you only build a factory in the US if you can keep labour costs low enough and the manufacturing automated enough so that you can still compete with other manufacturing hubs.
FuriouslyAdrift 3 hours ago||
The longer graph (starting at 1947) shows the shift in 2001 on more startlingly

https://fred.stlouisfed.org/series/PRS85006173

Corporate profit vs Labor income divergence (only up to 2018)

https://fredblog.stlouisfed.org/2018/08/corporate-profits-ve...

jcfrei 2 hours ago||
Fascinating. The 2001 shift aligns well with China's entry into the WTO.
tokai 3 hours ago||
Other countries in the world have manage to keep workers bargaining power in the face of globalization and technological progress.

I think in the case of US literally killing workers and union people is a huge part of why US workers lack power and why US unions are so impotent.[0]

[0] see Battle of Blair Mountain and what work Pinkerton mainly did from its founding to WW2, as examples.

wqaatwt 3 hours ago||
> Other countries in the world have manage to keep workers bargaining power

Such as? They might have managed to maintain it for privileged subgroups of the workforce but not for the average worker.

hash872 3 hours ago||
I don't have time for a longer comment, but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates. The doctor, lawyer, financial advisor, CPA etc. that in past decades would have had his/her income run through a W2 arrangement shifted to becoming a one-person corporation
hn_throwaway_99 3 hours ago||
Do you have any evidence for this, at all?
hash872 2 hours ago|||
Sure

https://www.brookings.edu/wp-content/uploads/2016/07/2013b_e... https://home.treasury.gov/system/files/131/wp-107.pdf https://eml.berkeley.edu/~yagan/LaborShare.pdf

hn_throwaway_99 1 hour ago||
Thanks very much for providing those sources.

That said, it's a huge pet peeve of mine when someone makes a statement, and then provides sources to back up that statement, but the actual sources contradict their original statement.

You stated "but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates." But then your very first linked article states "First, about a third of the decline in the published labor share appears to be an artifact of statistical procedures used to impute the labor income of the self-employed that underlies the headline measure."

I think there is a huge difference between 1/3 (while still a lot and an important factor) and what you wrote, "mostly a statistical illusion", especially since other substantial factors proposed in that article are things like offshoring.

saghm 3 hours ago||||
They seem to conveniently not have enough time to provide that in the comment
cucumber3732842 2 hours ago|||
Sure matches my anecdotal experience.

How much of an effect it has at the national statistical level I'm not sure.

prithvip 2 hours ago||
Exactly. Crazy you are getting downvoted for having the most informed comment here. The other aspect of this is the rise of franchisees in America. Previously, the salary of the manager of a corporate store would be measured as labor income. In a franchise, it would be measured as capital income.

https://bfi.uchicago.edu/insight/research-summary/the-rise-o...

ThrowawayIP 3 hours ago||
Okay, so say AI & MBAs are successful in replacing the labor spend of corporations on every level? What happens to "the economy"?
rglover 3 hours ago||
It transitions back to a more feudalist state. The series finale to "you will own nothing and be happy."

That is, if they're successful.

matheusmoreira 3 hours ago|||
Is there any reason to believe they won't be?
galleywest200 3 hours ago|||
The sheer number of people who would have nothing left to lose would probably fight back, literally, at that point.
rglover 2 hours ago|||
People tend to get excited when they can't eat and despite its timidity America is exceptionally well-armed. That sounds cute in a post drone strike world, but if the government attacks its own citizens like that, they'll have a hell of a time defending that position to the rest of the world. Humanity is usually slow on the uptake but eventually settles on "how about you just go fuck yourself" even if the party takes a sec to get going.

Who knows. I think it's better to err on the side of optimism despite the grim outlook.

carlosjobim 2 hours ago|||
That has already happened. The entire industrialized world is feudal. Young workers who are experts in their fields working full time can't afford a simple home. Young business owners who employ several people full time can't afford a simple home.
win311fwg 3 hours ago||
Not much. Early economies relied on mutual trade. I give you X and in return you give me Y. Soon we realized that you cannot always give Y in return immediately, so we invented accounting to keep track of your promise to give me Y at some point in the future. As time went by eventually we stopped caring about getting Y back in return and started taking an interest in collecting the promises themselves (i.e. profit).

Why would someone want to collect promises? That seems rather silly, right? What having a lot of promises gives you is social standing. People treat you differently — better — when they give you their promises. If traditional labor goes away, the economy simply becomes you promising to hold those who have things in the highest regard; to be there as their friend when they call for you to. That is the same modern economy we already have but with less steps.

feverzsj 2 hours ago||
Because labors in China are extremely cheap. And they are getting cheaper and cheaper in last decade, despite the GDP growth.
seizethecheese 2 hours ago|
As a hardware founder, I’ve seen the opposite until very recently. Labor cost has been going up much faster than inflation, at lease in hardware assembly.

Do you have a source?

jschveibinz 2 hours ago||
According to the article, automation (including software) and other technology "advancements" are important factors.

I think it's becoming clear that we are reaching a point where UBI must be debated in Congress subsidized by something that doesn't wreck economic growth and probably doesn't target capital investment.

crossbody 3 hours ago||
What happens if large cohort of Boomers retires and stop working, instead living on their savings? Labor share of income drops. If you remove this effect, the labor share of income is flat - confirmed by last week's analysis in The Economist.
em500 1 hour ago|
Pertinent data: https://fred.stlouisfed.org/series/SPPOP65UPTOZSUSA
lenerdenator 2 hours ago||
Equity should be a normal part of compensation for non-executive employees in addition to their wage/salary and benefits.

There's nothing about being in the C-suite that magically endows one with motivation based upon stock price, but we pretend that there is.

sigmoid10 3 hours ago|
Yikes. Good to know that labor shares used to rebound after crises, but since the 2000s and the dotcom bubble it has basically been downhill only. So don't expect any of this to get better unless we roll back technology to the last millenium.
ethagnawl 25 minutes ago||
> So don't expect any of this to get better unless we roll back technology to the last millenium.

Where do I sign this petition?

In general, though, I'd be perfectly fine with time being frozen in ~August 2001. Was it perfect? No. Was it better than where we are and looks like we're heading? Yes. Without a doubt.

MSFT_Edging 3 hours ago|||
It's not the tech but who sees the benefits. The issue at play is the monopolization and concentration of power.

Ie, why can one guy who is insanely wealthy due to stock valuations take loans against that to pull various levers of power. We didn't elect him, we need a way to control that outsized influence.

rafterydj 3 hours ago|||
Not technology - that's only downstream of politics.

No political administration in my lifetime (!) has made policy decisions against the interests of tech monopolists. The closest we got was Lina Kahn's FTC.

delfinom 3 hours ago||
Technology isn't the problem. The problem is the generation in governing power through the last 2 decades has no problem burning down the country's future to maintain lavish retirement funds for themselves.
ux266478 3 hours ago||
I think it's more nuanced than that. There surely are plenty of cases where that is the case, but it's also a natural effect of hyperfinancialization, which many really do believe to be a "net positive" for the stability it brings. There's also the natural tendency of consolidation and centralization of power, and the natural counter-balance to that has been suppressed. Then you have legislative incompetence, the general failings of scientific governance aggregating over time, and many other structural flaws that are deeply seated and long-running.

We shouldn't just be pointing at the (very much real) stupid greed, there are many rotten components occurring simultaneously.

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