“The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income.” That’s the wisdom from the smart guys at Goldman Sachs, per the New York Times’ drab, but crucial story on how workers are still making American business more productive–but take a smaller share of the national pie than they did at any time since the government began keeping track just after WWII.
“For most of the last century, wages and productivity — the key measure of the economy’s efficiency — have risen together, increasing rapidly through the 1950’s and 60’s and far more slowly in the 1970’s and 80’s.
But in recent years, the productivity gains have continued while the pay increases have not kept up. Worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent, according to Labor Department statistics analyzed by the Economic Policy Institute, a liberal research group. Benefits accounted for most of the increase.
“If I had to sum it up,” said Jared Bernstein, a senior economist at the institute, “it comes down to bargaining power and the lack of ability of many in the work force to claim their fair share of growth.”
And next time you hear the president talk about rising family incomes, take note: All of that “rising” involves the families at the very top of the income scale. The rest of you are just working harder to finance someone else’s profit.