>Fellow LBO'ers,
>
> I wanted to see what % of the national income (GDP) went to wages
>over the last 40 years and surprise, surprise the trend is down
>(data supplied by Commerce & BLS):
>
> Year Avg. Avg. Workers GDP %Pay/GDP
> Hours Pay (000's) (Billion $)
>
> 1965 38.6 2.63 60963 719.1 45
> 1975 35.9 4.73 76798 1638.0 41
> 1985 34.8 8.73 97626 4220.3 37
> 1995 34.3 11.66 117260 7397.7 33
> 2005 33.7 16.13 133786 11734.3(2004) 32
>
> The thing that prompted me to look at this was the debate on Social
>Security. I noticed that the long term trend for real wage
>increases was pegged at 1.1%/year while GDP growth is 1.6-2.0%/year
>depending on who you believe. This got me thinking, what happens to
>the difference between what workers get and what the economy
>over-all gets (the 0.5-0.9%)? My thinking was that if one divides
>the economy into two slices of one pie, with one slice being wages
>paid to workers and the other slice being income paid to the owners
>of capital, the long term trend is for workers to get an
>increasingly smaller share; and at infinity, the percent going to
>workers is zero if current trends continue.
It's got a long way to go til it gets to 0!
But this technique you're using is similar to what the Bureau of Economic Analysis uses in its early estimates of GDP. It revises the data when more complete info (like tax returns) come in. A problem, though, is that the average hours and pay figures are for private sector workers only, so it misses what's happening with government employees (who are, on average, pretty well paid).
Still, your fundamental point is right - the share of the income pie earned by "ordinary" workers (what the BLS calls nonsupervisory or production workers, who are 81% of the private sector workforce) is shrinking. High-income workers, upper-middle and senior managers, whose pay conceptually includes a large portion that's a return to capital, are getting more. Since the economy bottomed in late 2001, wages and salaries for employees of "corporate business" (which excludes proprietorships and small partnerships) are up 12%, and pretax profits are up 85%.
Doug