LABOR vs. CAPITAL….Here’s another interesting graph (from Brad DeLong) comparing the total share of national income going to corporate profits vs. the share going to labor compensation. The share going to labor plummeted abruptly in 2001 and is now at its lowest point in 40 years.
This behavior is quite a bit different than that in the previous recession of 1990-91, which showed a much more gradual decline. Is the difference due to Bush’s capital-friendly tax cuts in mid-2001 and 2003?
I don’t know, but whatever the reason it’s probably why the economy seems worse than the headline growth and unemployment numbers indicate. The economy is growing, but the vast majority of workers aren’t seeing any benefit. As the other chart in Brad’s post shows, employment levels are still very low, and as this chart shows, the people who are employed are either treading water or losing ground. That’s not a combination that makes for a happy electorate.