Labor Share Decline Argument Overlooked

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gross income

Tax Foundation

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Labor Share of Net Income is Within Its Historical Range

Summary

Nutrition label

87% Informative

David Rothkopf : Expect to see a resurgence of the argument that the labor share of income is in decline.

He says some categories counted as income in national accounting statistics do n’t actually end up in the pockets of workers or capital owners.

He argues that if the goal of measuring income shares is to reach conclusions about people’s welfare, then the appropriate measure is one that captures the amount of output available for current consumption or to invest in expanding future production.

Rothpf: Removing the categories of income that are not actually income reveals that labor and capital shares are well within their historical range.

The net capital share in the housing sector has moderately increased since the 1970s .

The rise in housing share means that the capital share is not being supported by increased employer bargaining.

Policymakers should remember that capital and labor are the main inputs to production.

More capital increases labor productivity, and more labor increases the return to capital.

VR Score

Informative language

Neutral language

Article tone

informal

Language

English