The Decline in Labor’s Share of Corporate Income Since 2000 Means $535 Billion Less for Workers & Journey for Justice, Taxing the Rich, and more in Practical Progress10&17SEP15

GREED, the basis of the 2016 republican presidential candidates campaigns is protecting the greed of the 1%, increasing their wealth and power and moving America closer to being a Third World plutocracy. Check this out from +Economic Policy Institute  and more from the good people of +Agenda Project Action Fund 

The Decline in Labor’s Share of Corporate Income Since 2000 Means $535 Billion Less for Workers

By Josh Bivens | September 10, 2015

Share on facebook Share on twitter Share on email More Sharing Services

Between 2000 and the second quarter of 2015, the share of income generated by corporations that went to workers’ wages (instead of going to capital incomes like profits) declined from 82.3 percent to 75.5 percent, as the figure shows. This 6.8 percentage-point decline in labor’s share of corporate income might not seem like a lot, but if labor’s share had not fallen this much, employees in the corporate sector would have $535 billion more in their paychecks today. If this amount was spread over the entire labor force (not just corporate sector employees) this would translate into a $3,770 raise for each worker.

Economic Snapshot

The decline in labor’s share of corporate income since 2000 means $535 billion less for workersShare of corporate-sector income received by workers over recent business cycles, 1979–2015

	Labor share
Jan-1979	79.0%
Apr-1979	79.5%
Jul-1979	80.2%
Oct-1979	80.8%
Jan-1980	81.2%
Apr-1980	82.7%
Jul-1980	81.9%
Oct-1980	80.6%
Jan-1981	80.3%
Apr-1981	80.4%
Jul-1981	79.6%
Oct-1981	80.5%
Jan-1982	81.6%
Apr-1982	81.0%
Jul-1982	81.0%
Oct-1982	81.4%
Jan-1983	81.0%
Apr-1983	79.9%
Jul-1983	79.4%
Oct-1983	79.1%
Jan-1984	77.8%
Apr-1984	78.0%
Jul-1984	78.5%
Oct-1984	78.3%
Jan-1985	78.4%
Apr-1985	78.6%
Jul-1985	78.2%
Oct-1985	79.6%
Jan-1986	79.9%
Apr-1986	80.8%
Jul-1986	81.5%
Oct-1986	81.8%
Jan-1987	81.7%
Apr-1987	80.9%
Jul-1987	80.4%
Oct-1987	80.9%
Jan-1988	80.9%
Apr-1988	80.9%
Jul-1988	80.8%
Oct-1988	80.2%
Jan-1989	80.6%
Apr-1989	80.9%
Jul-1989	80.9%
Oct-1989	81.9%
Jan-1990	81.8%
Apr-1990	81.6%
Jul-1990	82.7%
Oct-1990	83.1%
Jan-1991	82.2%
Apr-1991	82.5%
Jul-1991	82.8%
Oct-1991	83.3%
Jan-1992	83.0%
Apr-1992	83.1%
Jul-1992	83.6%
Oct-1992	83.0%
Jan-1993	83.5%
Apr-1993	82.7%
Jul-1993	82.7%
Oct-1993	81.4%
Jan-1994	81.4%
Apr-1994	81.3%
Jul-1994	80.6%
Oct-1994	80.3%
Jan-1995	80.6%
Apr-1995	80.4%
Jul-1995	79.5%
Oct-1995	79.7%
Jan-1996	79.1%
Apr-1996	79.1%
Jul-1996	79.2%
Oct-1996	79.3%
Jan-1997	79.0%
Apr-1997	78.9%
Jul-1997	78.3%
Oct-1997	78.5%
Jan-1998	79.9%
Apr-1998	79.9%
Jul-1998	79.8%
Oct-1998	80.4%
Jan-1999	80.3%
Apr-1999	80.6%
Jul-1999	81.0%
Oct-1999	81.4%
Jan-2000	81.8%
Apr-2000	81.9%
Jul-2000	82.4%
Oct-2000	83.1%
Jan-2001	83.1%
Apr-2001	82.8%
Jul-2001	83.0%
Oct-2001	84.0%
Jan-2002	82.0%
Apr-2002	81.8%
Jul-2002	81.8%
Oct-2002	80.9%
Jan-2003	80.3%
Apr-2003	80.1%
Jul-2003	79.8%
Oct-2003	79.9%
Jan-2004	78.8%
Apr-2004	78.7%
Jul-2004	78.6%
Oct-2004	78.5%
Jan-2005	77.0%
Apr-2005	76.9%
Jul-2005	77.2%
Oct-2005	76.0%
Jan-2006	75.5%
Apr-2006	75.4%
Jul-2006	74.7%
Oct-2006	76.1%
Jan-2007	77.3%
Apr-2007	76.9%
Jul-2007	78.3%
Oct-2007	79.4%
Jan-2008	79.8%
Apr-2008	79.7%
Jul-2008	80.1%
Oct-2008	83.7%
Jan-2009	79.8%
Apr-2009	79.4%
Jul-2009	78.4%
Oct-2009	77.4%
Jan-2010	76.4%
Apr-2010	76.7%
Jul-2010	74.9%
Oct-2010	74.9%
Jan-2011	77.1%
Apr-2011	76.0%
Jul-2011	76.0%
Oct-2011	74.2%
Jan-2012	74.6%
Apr-2012	74.2%
Jul-2012	73.9%
Oct-2012	74.6%
Jan-2013	74.3%
Apr-2013	74.3%
Jul-2013	74.7%
Oct-2013	74.6%
Jan-2014	76.4%
Apr-2014	75.0%
Jul-2014	74.1%
Oct-2014	75.0%
Jan-2015	75.7%
Apr-2015	75.5%

ChartData

Note: Shaded areas denote recessions. Federal Reserve banks' corporate profits were netted out in the calculation of labor share.

Source: EPI analysis of Bureau of Economic Analysis National Income and Product Accounts (Tables 1.14 and 6.16D)

Share Tweet

Embed Download image

As Lawrence Mishel and I discuss in our recent paper, the largest wedge driving the growing gap between economy-wide productivity and typical workers’ pay is rising inequality. Part of this increase in inequality is the shift in national income from labor compensation to capital incomes. Since 2000, this decline in labor’s share of income has become a significant contributor to the inequality wedge. The figure shows labor’s share of corporate sector income. Because all income in the corporate sector is either classified as labor compensation or capital incomes (profits plus net interest), this makes it a sensible first place to look for this labor-to-capital shift.

---

See related work on Wages, Incomes, and Wealth

See more work by Josh Bivens

There’s More to Economic Security than the Official Poverty Measure

Next week, the Census Bureau will release its estimates of the number of Americans who lived in poverty in 2014. The official poverty measure is an important metric—particularly since it’s been in place for nearly 50 years, and its measurement methodology hasn’t had major revisions over that time. As shown in the figure below, the share of Americans living at or below the official poverty line fell in the 1960s and stayed within a small range over the last four decades or so, generally rising in recessions and falling in expansions. Since 2000, the official poverty rate has seen a lot more up than down—the poverty rate at the end of the business cycle in 2007 was higher than at the beginning. 2013 was the first year the poverty rate turned the corner and saw some meaningful improvement since the start of the Great Recession. On Wednesday, September 16, we will see whether that progress has continued. While it would be great to see reductions in poverty over the last year, the fact is had economic growth over the last four decades been broadly shared, we could have made much more progress in reducing poverty, rather than just treading water.

GREED, the basis of the 2016 republican presidential candidates campaigns is protecting the greed of the 1%, increasing their wealth and power and moving America closer to being a Third World plutocracy. Check this out from +Economic Policy Institute  and more from the good people of +Agenda Project Action Fund  The Decline in Labor’s Share of Corporate Income Since 2000 Means $535 Billion Less for Workers By Josh Bivens | September 10, 2015 Between 2000 and the second quarter of 2015, the share of income generated by corporations that went to workers’ wages (instead of going to capital incomes like profits) declined from 82.3 percent to 75.5 percent, as the figure shows. This 6.8 percentage-point decline in labor’s share of corporate income might not seem like a lot, but if labor’s share had not fallen this much, employees in the corporate sector would have $535 billion more in their paychecks today. If this amount was spread over the entire labor force (not just corporate sector employees) this would translate into a $3,770 raise for each worker. Economic Snapshot The decline in labor’s share of corporate income since 2000 means $535 billion less for workersShare of corporate-sector income received by workers over recent business cycles, 1979–2015 198019902000201072.57577.58082.585% ChartData Note: Shaded areas denote recessions. Federal Reserve banks' corporate profits were netted out in the calculation of labor share. Source: EPI analysis of Bureau of Economic Analysis National Income and Product Accounts (Tables 1.14 and 6.16D) Share Tweet Embed Download image As Lawrence Mishel and I discuss in our recent paper, the largest wedge driving the growing gap between economy-wide productivity and typical workers’ pay is rising inequality. Part of this increase in inequality is the shift in national income from labor compensation to capital incomes. Since 2000, this decline in labor’s share of income has become a significant contributor to the inequality wedge. The figure shows labor’s share of corporate sector income. Because all income in the corporate sector is either classified as labor compensation or capital incomes (profits plus net interest), this makes it a sensible first place to look for this labor-to-capital shift. See related work on Wages, Incomes, and Wealth See more work by Josh Bivens There’s More to Economic Security than the Official Poverty Measure Next week, the Census Bureau will release its estimates of the number of Americans who lived in poverty in 2014. The official poverty measure is an important metric—particularly since it’s been in place for nearly 50 years, and its measurement methodology hasn’t had major revisions over that time. As shown in the figure below, the share of Americans living at or below the official poverty line fell in the 1960s and stayed within a small range over the last four decades or so, generally rising in recessions and falling in expansions. Since 2000, the official poverty rate has seen a lot more up than down—the poverty rate at the end of the business cycle in 2007 was higher than at the beginning. 2013 was the first year the poverty rate turned the corner and saw some meaningful improvement since the start of the Great Recession. On Wednesday, September 16, we will see whether that progress has continued. While it would be great to see reductions in poverty over the last year, the fact is had economic growth over the last four decades been broadly shared, we could have made much more progress in reducing poverty, rather than just treading water. Poverty rate, 1959–2013 Actual poverty rate 1959-01-01 22.4% 1960-01-01 22.2% 1961-01-01 21.9% 1962-01-01 21.0% 1963-01-01 19.5% 1964-01-01 19.0% 1965-01-01 17.3% 1966-01-01 14.7% 1967-01-01 14.2% 1968-01-01 12.8% 1969-01-01 12.1% 1970-01-01 12.6% 1971-01-01 12.5% 1972-01-01 11.9% 1973-01-01 11.1% 1974-01-01 11.2% 1975-01-01 12.3% 1976-01-01 11.8% 1977-01-01 11.6% 1978-01-01 11.4% 1979-01-01 11.7% 1980-01-01 13.0% 1981-01-01 14.0% 1982-01-01 15.0% 1983-01-01 15.2% 1984-01-01 14.4% 1985-01-01 14.0% 1986-01-01 13.6% 1987-01-01 13.4% 1988-01-01 13.0% 1989-01-01 12.8% 1990-01-01 13.5% 1991-01-01 14.2% 1992-01-01 14.8% 1993-01-01 15.1% 1994-01-01 14.5% 1995-01-01 13.8% 1996-01-01 13.7% 1997-01-01 13.3% 1998-01-01 12.7% 1999-01-01 11.9% 2000-01-01 11.3% 2001-01-01 11.7% 2002-01-01 12.1% 2003-01-01 12.5% 2004-01-01 2005-01-01 12.6% 2006-01-01 12.3% 2007-01-01 12.5% 2008-01-01 13.2% 2009-01-01 14.3% 2010-01-01 15.1% 2011-01-01 15.0% 2012-01-01 15.0% 2013-01-01 14.5% 2013: 14.5%1960197019801990200020100510152025% ChartData Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Poverty Tables (Tables 2 and 4), Bureau of Economic Analysis National Income Product Accounts public data, and Danziger and Gottschalk (1995) Share Tweet Embed Download image The poverty measure has an important function of historical significance, but it also has limitations. It shows how many people live in severe economic deprivation, but that’s not to say that people who live above the poverty line are doing well. In an admittedly oversimplified characterization, the official poverty threshold is a family-composition-adjusted basic food budget in 1963 multiplied by three, adjusted for inflation over time. The official poverty measure includes Social Security and unemployment insurance as a form of income, but misses some important government supports, like food stamps (SNAP) or the Earned Income Tax Credit. It fails to take into account the fact that the prices of some necessary items, like health care, have grown much faster than overall inflation. It fails to change the items in the basket of costs it measures, neglecting the cost of child care, which became increasingly important as women entered the labor force over the last 50 years. And, it fails to take into account for the vast differences in the cost of living across the country. The map below shows the poverty threshold for a two-parent, two-child family in 2014—$24,008, everywhere throughout the country, despite the fact that it costs significantly more to live in New York City than it does in Tennessee. Federal poverty threshold Source: EPI analysis of US Census Bureau Historic Poverty Tables “Poverty Thresholds for 2014 by Size of Family and Number of Related Children Under 18 Years.” Share Tweet Embed Download image The poverty threshold is not only insufficient at capturing differences in the cost-of-living across the country, but it is insufficient at measuring what it truly costs to get by. EPI’s Family Budget Calculator measures the income a family needs in order to attain a secure yet modest standard of living in 618 metropolitan and rural areas across the country. The budgets are calculated by estimating community-specific costs of housing, food, child care, transportation, health care, other necessities, and taxes. The budgets differ by location, since certain costs, such as housing, vary significantly depending on where one resides. Compared with the federal poverty line, EPI’s family budgets provide a more accurate and complete measure of economic security in America. Family Budget MapThe cost to secure a decent but modest standard of living for a two-parent, two-child family The cost of living in • • • is: • • •per year • • •per month $49,114$106,493 Note: Data for all 10 family budget types and all 618 family budget areas, including those in Alaska and Hawaii, are available via EPI’s Family Budget Calculator. Source: EPI Family Budget Calculator (Gould et al. 2015a) Share Tweet Embed Download image Notably, these budgets do not include several components of what might be considered part of a middle-class lifestyle. In particular, they do not include any savings: There are no savings for a rainy day (e.g., job loss or unexpected medical bills), savings for retirement (except through Social Security payments), or further investments in their children (e.g., enrichment activities or college savings). Thus, these are adequate but decidedly modest family budgets—they show what it takes to get by, but not to thrive. To show just how inadequate the poverty threshold is compared to the real cost of living, the map below subtracts the federal poverty threshold from the family budget for each area across the country. The difference between the federal poverty line and the actual cost of living for a two-parent, two-child family The cost of living in • • • is • • • more than the federal poverty threshold. $25,106$82,485 Note: Data for all 10 family budget types and all 618 family budget areas, including those in Alaska and Hawaii, are available via EPI’s Family Budget Calculator. Source: EPI analysis of US Census Bureau Historic Poverty Tables “Poverty Thresholds for 2014 by Size of Family and Number of Related Children Under 18 Years and EPI Family Budget Calculator (Gould et al. 2015a) Share Tweet Embed Download image This map illustrates just how insufficient the poverty threshold is in measuring economic well-being. It takes an additional $25,106 to live in the cheapest budget area (Morristown, Tenn.) and another $82,485 above the poverty threshold to live in the most expensive (Washington, D.C.). In the median family budget area for this family type (Des Moines, Iowa) a two-parent, two-child family needs an additional $39,733 to make ends meet, above the poverty line. Reducing poverty is a low bar for policy. It’s important to help those having the hardest time make ends meet, but it’s also important to raise our standards and find ways to increase economic security. The Most Important News from the Progressive Movement brought to you by the Agenda Project Action Fund JOURNEY FOR JUSTICE…CALIFORNIA WINS … SILENCING SONARS … TAX REFORM IN MASSACHUSETTS… VOTER REGISTRATION VICTORIES...ECONOMIC SNAPSHOT... JOURNEY FOR JUSTICE - The NAACP has succeeded in their historic 1,000 mile Journey for Justice march, which started in Selma, Alabama and concluded on Capitol Hill in Washington, DC as participants advocated for the restoration of the Voting Rights Act. Learn more about the history making march HERE. VOTER REGISTRATION LANDMARK - The Brennan Center for Justice is celebrating a landmark victory in California as automatic voter registration passes through the state legislature. Read their press release HERE. BILLIONAIRES vs. TEACHERS - Brave New Films has released their latest film that shines a light on how the top 25 hedge fund managers make more money and pay less in taxes than all kindergarten teachers in the U.S combined. Watch the brief film HERE. SNEAK ATTACK- The Free Press Action Fund is calling on Congress to stop the attacks on Net Neutrality that are hidden in the appropriations bill. Stand with the FCC’s rules on Net Neutrality by signing the petition HERE. HISTORIC HEALTH COVERAGE GAIN- The Center on Budget and Policy Priorities has released its predictions and analysis on the upcoming Census Bureau’s estimate of the U.S population’s health coverage for 2014. See the data that shows historic health coverage gain in our country HERE. MASSACHUSETTS TAX REFORM - Raise Up Massachusetts has successfully placed an initiative that would implement tax reform for top earners in the state on the 2016 ballot. The initiative calls for all incomes of over $1 million to be taxed at 4% higher rates. Read more information about the initiative HERE. WEEKLY DEMOCRACY WINNER- The Democracy for All Video Challenge $1,000 winner this week is from the group Student Debt Crisis. Watch the winning video HERE. CITIZENS UNITED IN CALIFORNIA COURT- The California Supreme Court has announced that they will hear if Proposition 49, the Overturn Citizens United Act, should be on next year’s ballot after it was initially rejected. Read more about upcoming hearing from California Common Cause, a lead organization in the fight HERE. PROTECTION HOTLINE- Lawyer’s Committee for Civil Rights Under Law has paired up with various organizations to provide over-the-phone assistance to people who are registering to vote on September 22, National Voter Registration Day. To find out more about the hotline click HERE. SILENCING SONARS- A huge victory for the Natural Resource Defense Council and marine animals around California and Hawaii as the U.S Navy agrees to silence their sonars that often leave marine animals deaf and at risk. Read more about the sonars that are being silenced and the effects they have on the ocean HERE. ECONOMIC SNAPSHOT- The Economic Policy Institute has released this week’s economic snapshot analyzing the decline in labor’s share of corporate income and the $535 billion less for workers because of it. Read the publication HERE. … From the Wonk Wire… It’s Not Just Uber: Why the Taxi Industry Needs an Overhaul- Top Wonk Caroline Fredrickson, the President of the American Constitution Society for Law and Policy, writes about the need for both Uber and the taxi industry to comprehensively reform their structure in a way that services riders and drivers. Read her article HERE. 2015 National Fair Housing Conference, Residential Segregation- Economic Policy Institute research associate and Top Wonk Richard Rothstein joined housing policy experts to discuss residential segregation and diversity in America’s cities for the 2015 National Fair Housing Conference. Watch the discussion HERE. American Constitution Day Symposium- American Constitution Society for Law and Policy has started a blog series discussing the Constitution written by various constitutional scholars. The blog series will run all week and first few posts can be found HERE. ...Visit our website at www.PracticalProgress.org and our Twitter @NewsInProgress. Like what you see? JOIN the movement by sending tips, news, and reactions to PracticalProgress@agendaproject.org...