Nearly $2 Trillion Purloined from U.S. Workers in 2009

[marmar]

from Dollars & Sense:




Nearly $2 Trillion Purloined from U.S. Workers in 2009
BY JAMES M. CYPHER


In 2009, stock owners, bankers, brokers, hedge-fund wizards, highly paid corporate executives, corporations, and mid-ranking managers pocketed—as either income, benefits, or perks such as corporate jets—an estimated $1.91 trillion that 40 years ago would have collectively gone to non-supervisory and production workers in the form of higher wages and benefits. These are the 88 million workers in the private sector who are closely tied to production processes and/or are not responsible for the supervision, planning, or direction of other workers.

From the end of World War II until the early 1970s, the benefits of economic growth were broadly shared by those in all income categories: workers received increases in compensation (wages plus benefits) that essentially matched the rise in their productivity. Neoclassical economist John Bates Clark (1847-1938) first formulated what he termed the “natural law” of income distribution which “assigns to everyone what he has specifically created.” That is, if markets are not “obstructed,” pay levels should be “equal (to) that part of the product of industry which is traceable to labor itself.” As productivity increased, Clark argued, wages would rise at an equal rate.

The idea that compensation increases should equal increases in average labor productivity per worker as a matter of national wage policy, or a wage norm, is traceable to the President’s Council of Economic Advisors under the Eisenhower and Kennedy administrations. This macroeconomic approach was anchored in the fact that if compensation rises in step with productivity growth, then both unit labor costs and capital’s versus labor’s share of national income will remain constant. This “Keynesian Consensus” never questioned the fairness of the initial capital/labor split, but it at least offered workers a share of the fruits of future economic growth.



As the figure shows, both Clark’s idea of a “natural law” of distribution and Keynesian national wage policy have ceased to function since the onset of the neoliberal/supply-side era beginning in the early 1970s. From 1972 through 2009, “usable” productivity—that part of productivity growth that is available for raising wages and living standards—increased by 55.5%. Meanwhile, real average hourly pay fell by almost 10% (excluding benefits). As a group, workers responded by increasing their labor-force participation rate. To make the calculation consistent over time, employment is adjusted to a constant participation rate set at the 1972 level. Had compensation matched “usable” productivity growth, the (adjusted) 84 million non-supervisory and production workers in 2009 would have received roughly $1.91 trillion more in wages and benefits. That is, 13.5% of the nation’s Gross Domestic Product in 2009 was transferred from non-supervisory workers to capitalists (and managers) via the gap of 44.4% that had opened up between compensation and “usable” productivity since 1972. ................(more)

The complete piece is at: http://www.dollarsandsense.org/archives/2011/0711cypher.html

[Dept of Beer]

1. I'm really tired of this. can't we just hang all the fekkers

and start over again?

[dissidentboomer]

2. got a rope? I know a nice oak tree.

[Demeter]

3. It's coming

Things have got to get worse before they will get better, however, due to a complete lack of leadership on issues of public well-being.

In 50 years, no one will recognize corporations because they will not exist as presently constituted, organized and run. And our government will either be made wholly democratic, or we will perish.

[truedelphi]

4. Meanwhile, people in the 17K to 22K arena of income will pay more

In income tax. One percent more, to be exact.

Because the richest of the rich cannot afford to lose the Bush tax cuts.