right, so now more than ever... if you're not saving/investing you are falling behind.
The labor share of income in the US is at its lowest post-war level
461–470 of 573 posts
Re: The labor share of income in the US is at its lowest post-war level
#462Earlier quoted context omitted.
I used to think this - but when I talked to a tax lawyer friend and we walked through the steps they take, usually they're just deferring taxation that does end up getting paid by an entity eventually.
Capital gains tax is clearly lower than income tax. So why did you change your mind?
Their income would be capital gains regardless of whether they use these methods or not.
Re: The labor share of income in the US is at its lowest post-war level
#463Earlier quoted context omitted.
It's just rent. Rent for the homes we live in (including "rent" as mortgage payments to the bank) Rent passed through as costs to the consumer for the businesses we patronize. We're stuck at home more affording to be able to do less so the people who own don't have to work.
And it's wild to me how we can't seem to figure out how to bring the cost for this down. Building affordable houses should be our no. 1 priority.
This isn't just about residential rent. Commercial rent squeezes businesses, forcing wages downward and prices upward.
Re: The labor share of income in the US is at its lowest post-war level
#464Earlier quoted context omitted.
>That chart doesn't make the case you think it does. Real median household income rising [...] Where are you getting household income from? It clearly says "Personal Income"
You're right, I was mixing up the related charts. Still, this makes my case even stronger since personal controls for adding more earners to a household. If real median personal income only rose from ~$28k in 1974 to ~45$k today, that's a 60% increase. Median personal income rising by 0.9% every year over 50 years compared to healthcare rising by 3-4% every year since 2000 is not a gap you can ignore. Necessities gre…
>Still, this makes my case even stronger since personal controls for adding more earners to a household. If real median personal income only rose from ~$28k in 1974 to ~45$k today, that's a 60% increase.
Labor force participation rate for both males and females has basically been flat for the past decade, so the recent discontent about "costs are all increasing while wages are stagnant or worse" is still unsupported. Moreover the 1970s was never an era of stay at home moms. Female labor force participation rate was already 45%, against around 78% for male. It also topped out at around 60% (so basically 15% increase, max) with the rate for males dropping.
Re: The labor share of income in the US is at its lowest post-war level
#465Earlier quoted context omitted.
> A person paid to do child care in an organization with overhead, who has to pay taxes, etc. is not productive enough They are highly productive but the market doesn't value them. It values the backup forward on a basketball team - an almost completely non-productive job - more than a doctor. It values the owner of a company at $1 trillion, which is obviously absurd.
It's not "absurd"... you're confusing moral value with economic scale. A $1T founder is rewarded for building a massive system that employs hundreds of thousands of people, moved technological progress forward dramatically, and has positively affected the lives millions. A doctor provides life-saving care, but they are physically limited to helping one person at a time. A backup NBA forward might not save lives, but…
I understand how the marketplace works, but the value - the contribution, the marginal value - to society doesn't match it.
The $1T business owner doesn't provide nearly that much marginal value to society.
The backup (or starting) NBA forward provides zero marginal value - if they didn't do it, someone else would and the outcome for society, entertainment, would be the same. It doesn't matter how well they play basketball; that doesn't make it more entertaining (with a few extraordinary exceptions). People in the US enjoy college sports, where performance is much worse, as much as professional sports. People root for their 'bad' local team as much as a good one: they do prefer winning, but that is a zero sum tradeoff with the other team's fans.
The income for the two examples are the results of economic distortions.
My kids' teachers provide contribute far more than the latter, and far more than they are paid.
Re: The labor share of income in the US is at its lowest post-war level
#466Earlier quoted context omitted.
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
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 benefici…
I'm a bit skeptical that you absorbed these 3 pieces in the time it took you to respond (they are 27, 29, and 63 pages, respectively), but they find a range of effect sizes here- the other two a bit more strongly. I feel comfortable with my original statement, though I suppose there's always room for nitpicking
Re: The labor share of income in the US is at its lowest post-war level
#467People are misreading the conclusion - the Covid related drop is normal and matches previous episodes, but the massive overall drop since 2000 is not. The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
We have one of the worlds most prosperous economies, and half of the US is living in abject poverty while quality of life for everyone is decreasing.
[dead]
Re: The labor share of income in the US is at its lowest post-war level
#468Obviously the solution here is for workers to also become shareholders.
Bit of a double-edged sword, that. Worker-owned businesses are great, but if you instead make workers minority shareholders, you get... the modern retirement system, and inflated asset prices that benefit the ultra-wealthy far more than common investors.
Re: The labor share of income in the US is at its lowest post-war level
#469Earlier quoted context omitted.
I'm going to go on a limb and say half of the US is not living in abject poverty? Nor can I get behind the idea that quality of life for folks is on the down trend.
Sorry but you’re smoking crack if you don’t think quality of life is deteriorating in the US. The anxiety and misery is literally palpable.
[dead]
Re: The labor share of income in the US is at its lowest post-war level
#470Earlier quoted context omitted.
Actually markets are always rational, perfectly efficient and there are no speculative bubbles? Of course not. So its obviously suboptimal, only question if there is a more optimal system. > central planner who somehow has all the information Every developed country is balancing that with free markets and its the mainstream view that a balanced system is optimal (the exact ratio is of course something’s that not quit…
Yes and going back to the your original question > Assuming that the allocation of capital is somehow aligned with what’s optimal for the economy/society seems naive The empirical facts are that the disposable real wages have gone up by more than 50% over the last 20 years. People are way richer now than before and the growth in USA is much higher than any other developed nation other than small edge cases.
The causal link between those two data points is not exactly obvious.