People are misreading the conclusion - the Covid related drop is normal and matches previous episodes, but the massive overall drop since 2000 is not.
The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
"The past three economic expansions have largely benefitted the top 10 percent. In each, the top decile received between 47 percent and 59 percent of all income growth in the expansion."
The chart you're showing, absolutely reflects the reality of some of the most productive segments of our economy.
Ford now makes more cars, with fewer people. Sears used to have people who took photos, laid out catalogs, opened envelopes (with checks in them).... Amazon has none of that. We replaced switch board operators, with mechanical, then digital switching. More calls routed, fewer people required. go back 45 years and "draftsmen" was a job - replaced by auto cad.
All these industries have seen massive productivity.
Are the people flipping burgers more productive? Plumbers? Welders? Teachers? Nurses? -- to some extent yes, because of technology but not to the same extent as the previous businesses. Anything that qualifies as "service economy" work has not seen the same gains as Ford (see: https://www.aei.org/carpe-diem/phenomenal-gains-in-manufactu... )
> The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
My understanding is that "fixed" costs like rent and groceries have gone up and taken more of people's budgets, while wages failed to catch up with this inflation.
If that's the case, it's markedly different from "situation on the ground is unchanged". I don't know how the overall pie is doing, but it has not grown enough to compensate for the labor share drops shown in the article. The slice on my plate is certainly lighter.
Since 2000 the biggest economic change is software. While most workers doing physical jobs have only made themselves slightly more efficient (or maybe mass immigration has maybe even reduced efficiency in some sectors), some workers (tech workers) have made themselves hundreds or thousands of times more efficient and captured the gains as equity (either in their own startup, their job, etc...). The positive is that growth overall has still lifted living the average living standard.
>the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us
I don't see where the article made that claim. Are you making it yourself and can you support it? That sounds like something that would happen when technology improves. What the article does do, is pose a question that it never answers: "When the labor share falls, it means that productivity, prices, or both [which?] are growing faster than wages."
Unit cost on labor has increased at a more or less steady pace this whole time. Ergo, it's not so much that labor is decreasing as other things are increasing faster.
It's hard to argue that technology is increasing labor productivity an order of magnitude faster than it was in the 50s. It's more likely something else in the dataset (returns on capital/rent) is exploding in value.
I don't know which people you're referring to, but the conclusion is pretty clear: the _share_ of the total pie captured by labor is shrinking. Productivity is increasing, but capital is capturing all, or almost all, the benefits of that increased productivity and economic growth.
AI is going to further exacerbate this inequality.
I'm going to go on a limb and say half of the US is not living in abject poverty? Nor can I get behind the idea that quality of life for folks is on the down trend.
It's amazing how few people are willing to admit there is a problem. Spend 45 minutes driving around the state I live in talking to random people and it's painfuly obvious this is reality that some. I suppose it's mostly epstein sympathizers who are pushing the narrative that everything is perfect and nothing needs to be done.
>the amount of labor being generated per person has not really changed
im not really understanding what you mean. i dont get how labor is generated, in particular. do you mean to say the amount of total hours dedicated to labor per person or something else?
he's referring to labor productivity, e.g., the economic value produced per unit of labor input. it also _has_ changed significantly, as seen here: https://fred.stlouisfed.org/series/OPHNFB
I have a similar PoV. I think rent seeking without sufficient checks is one of the biggest problems in our economy.
But the underlying problem that people aren't paid enough is still true. Outside a few fields, most people are underpaid. It's even more stark when measured against productivity increases during the same time periods. That wealth went somewhere. It wasn't to most people.
People have a tendency to get upset when they realize these kinds of things.
Benn Jordan just released a new video proposing that we are not in “late stage capitalism” and instead we are currently an offshoot of capitalism called “leverageism”.
In the video he describes how when people like Elon Musk get to the level of wealth that they are at, it becomes far more beneficial for them to take from (or stunt) the spending power of lower classes than it is to add to their own net worth dollar figure - simply put, the former moves the needle far more in their favor than the latter.
Definitely explained the idea of our slice remaining the same while the overall pie around us is getting larger.
"Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. <later> ... and they provide little evidence that it will evolve differently from past episodes."
This conclusion seems to be against "this time is different" arguments. Should we be generally encouraged by similarity to past declines pre-2000 or bearish and think that there is more drop to come like the 2000-2007 and 2007-2019 periods they graph out?
I guess there is no way to predict other than check back in after time passes.
The submitted title is a bit sensationalist given the article’s conclusion:
> Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. First, the labor share’s trajectory post-COVID broadly follows the cyclical patterns observed in earlier recessions, with a decline during the recovery phase that mirrors historical dynamics. Second, the decline in the labor share since COVID is driven primarily by within-industry changes rather than shifts in economic activity across sectors. Taken together, these results suggest that the post-COVID decline follows the same cyclical patterns as earlier recessions and is driven by the same within-industry forces, and they provide little evidence that it will evolve differently from past episodes.
What I find more interesting is the sharp drop around the early 2000s
Capital be praised that capital owners are back on top.
May the low-waged ever be trodden upon and forever know their true place.
Those that died or became disabled during covid are mewling degenerates.
Their cries of 'illness', 'poverty', and 'homelessness' are precisely as useless as the wailing and lamentation of women in their menses, a farcical thing to be dismissed and ignored.
It's not necessarily limited to the ultra wealthy, but outside of a few key areas (as someone mentions, those profiting off of the inflationary spike, those in the real estate market, etc) it is more or less the case, yes.
How do you know that you're not the one hanging around the "wrong people" to know better? You could just as easily be surrounding yourself with wealthy people as they could be with non-wealthy.
Without data, it just sounds like "my social circle is more indicative of reality than yours". Maybe it is! But maybe not, so it's not particularly convincing
The annoying/sad/infuriating thing is the ultra wealthy don’t have “income.” Technically, according to IRS rules, much of what they experience (housing, food, etc) should be classified as income. But their lawyers and accountants help them keep that looking quite low.
This report is only about wages, so even if the ultra-wealthy reported their real sources of income, they wouldn’t shut up as “labor” the way this defines it.
Capital gains not being considered earned income is simply sensible use of terminology to categorize different ways of amassing purchasing power. For example, in order to carry out the linked analysis.
I used to think this - but when I talked to a tax lawyer friend and we walked through the steps they take, usually they're just deferring taxation that does end up getting paid by an entity eventually.
Not at all. The real estate share of income is probably at its highest among a lot of people who belong to the non-labouring class, but are far from ultra wealthy. But it's nice to have a scapegoat, isn't it?
If you belong to the 'non-laboring class' you are by definition the ultra wealthy. It's wild how much people are willing to slide goalposts to make themselves feel better.
Interesting that most of the decline happened in the 2000s. The graph shows a large decline from ~2000 to ~2008 which continues after the GFC before going up a bit in the 2010s. The drop off since COVID is comparatively small.
I think this is part of a long term development where technology and globalization slowly erode workers bargaining power. Basically you only build a factory in the US if you can keep labour costs low enough and the manufacturing automated enough so that you can still compete with other manufacturing hubs.
Are there hollistic analysis? I generate income with my labor, but I also save in retirement and investment accounts. On analysis like this that we typically see, are these two things competing? Are we really just seeing a rise in retirement savings?
As a hardware founder, I’ve seen the opposite until very recently. Labor cost has been going up much faster than inflation, at lease in hardware assembly.
I don't have time for a longer comment, but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates. The doctor, lawyer, financial advisor, CPA etc. that in past decades would have had his/her income run through a W2 arrangement shifted to becoming a one-person corporation
Exactly. Crazy you are getting downvoted for having the most informed comment here. The other aspect of this is the rise of franchisees in America. Previously, the salary of the manager of a corporate store would be measured as labor income. In a franchise, it would be measured as capital income.
That has already happened. The entire industrialized world is feudal. Young workers who are experts in their fields working full time can't afford a simple home. Young business owners who employ several people full time can't afford a simple home.
Not much. Early economies relied on mutual trade. I give you X and in return you give me Y. Soon we realized that you cannot always give Y in return immediately, so we invented accounting to keep track of your promise to give me Y at some point in the future. As time went by eventually we stopped caring about getting Y back in return and started taking an interest in collecting the promises themselves (i.e. profit).
Why would someone want to collect promises? That seems rather silly, right? What having a lot of promises gives you is social standing. People treat you differently — better — when they give you their promises. If traditional labor goes away, the economy simply becomes you promising to hold those who have things in the highest regard; to be there as their friend when they call for you to. That is the same modern economy we already have but with less steps.
According to the article, automation (including software) and other technology "advancements" are important factors.
I think it's becoming clear that we are reaching a point where UBI must be debated in Congress subsidized by something that doesn't wreck economic growth and probably doesn't target capital investment.
What happens if large cohort of Boomers retires and stop working, instead living on their savings? Labor share of income drops. If you remove this effect, the labor share of income is flat - confirmed by last week's analysis in The Economist.
Yikes. Good to know that labor shares used to rebound after crises, but since the 2000s and the dotcom bubble it has basically been downhill only. So don't expect any of this to get better unless we roll back technology to the last millenium.
It's not the tech but who sees the benefits. The issue at play is the monopolization and concentration of power.
Ie, why can one guy who is insanely wealthy due to stock valuations take loans against that to pull various levers of power. We didn't elect him, we need a way to control that outsized influence.
Not technology - that's only downstream of politics.
No political administration in my lifetime (!) has made policy decisions against the interests of tech monopolists. The closest we got was Lina Kahn's FTC.
Technology isn't the problem. The problem is the generation in governing power through the last 2 decades has no problem burning down the country's future to maintain lavish retirement funds for themselves.
I think it's more nuanced than that. There surely are plenty of cases where that is the case, but it's also a natural effect of hyperfinancialization, which many really do believe to be a "net positive" for the stability it brings. There's also the natural tendency of consolidation and centralization of power, and the natural counter-balance to that has been suppressed. Then you have legislative incompetence, the general failings of scientific governance aggregating over time, and many other structural flaws that are deeply seated and long-running.
We shouldn't just be pointing at the (very much real) stupid greed, there are many rotten components occurring simultaneously.
The most interesting takeaway I see in the labor share percentage graph is the trend that labor share increases into the recession. Post recession share trends down for a bit.
How much of the trend is due to employment trends vs. printing money for the wealthy to get their hands on it first(and profit) post recession?
Yes by design. Basically just by designating one part of the economy as non-productive consumption economy, and the other part as production economy, they create the justification for inflation - so that the government can have free money and take it from the stupid consumers by decreasing their wealth a little every year should they choose not to spend it, and give it (sorry, invest) to the nice productive entrepreneurial capitalist part of enconomy who will somehow reinvest it allegedly (read: mostly buy up shit the former half needs and sell it back to them at markup), the system has a direct wealth transfer mechanism that points from the poor to the rich, it couldn't be any more shameless and obvious if they tried.
I wonder if labor itself will become an anachronism in the age of AI. Perhaps the future economic landscape will be dominated by capital because everyone will own capital. You will command a small army of agents to do whatever you want. You will no longer need to work for someone. You own small businesses far more than you could possibly operate in the pre-AI era and they will mostly operate autonomously with minimal direction and some guidance from you.
We live in a world with a sever housing crisis - not shortage, as there are usually enough units, people just can't afford them.
One would assume the difficulty of building housing has gone down with the general progress of technology - and if all else fails, you can just do what they did 50, 100 years ago where affordability was far less a struggle - people, who had less income in real terms spent proportionally less on it.
So did society devolve that an unit of industrial output has become more expensive? Or did money and resources just go into a parallel 'rich people economy', that has created a constant drain on the resources of average people?
Assuming your labour contribution to these agents is 'minimal':
Why would you own them, instead of some well capitalized billionaire?
To the extent that you do have capital, why do you assume that your 'minimal direction and guidance' would outcompete a full time specialist working for that billionaire?
It's basic economics; larger firms become progressively less efficient for the same reason that communist command economies are inefficient, because there's no internal price signals to guide resource allocation. So there's a natural cap on how big a firm can get (in information theoretic terms, there's a hard limit on the amount of information a centralized structure can process effectively).
The longer I participate in the economy the more it starts to feel like the end stages of a game of monopoly. There is nothing left to own unless you already are wealthy and the only way to get ahead is luck.
Well yeah. This is why we're calling end-stage capitalism. What's coming looks like technofeudalism.
All companies are rent-seeking. Selling something is no longer a goal.
Prices go up up up up up.
Oligopolies and price fixing is normal.
Monopolies are normal with little/no controls.
People are getting paid a pittance to the work done.
Unions are their weakest in a century.
NLRB is basically frozen due to no quorum on the head board.
Companies routinely scam and lie at multiple places in hiring pipeline. FTC does nothing.
Neither party (Republicans or Democrats), save the DSA, fights for the American people.
Its all coming to a head, and baskets, and guillotines. Anybody who studies history knows what kind of powderkeg this situation is. Its also the reason the Ancient Romans made panem et circunses (bread and circus) cheap or free. You get riots and revolts otherwise.
this is relatively unremarkable for those with an understanding of wage, labor, profit, price and capital.
capitalism will always seek to reduce labor cost. during the epoch of neoliberalism it achieved great strides in this by reducing labor power through union busting by both thatcher and reagan in the UK and US respectively. it has also effectively curtailed any increase in the minimum wage for nearly 20 years as well as reduced protections, regulation and prosecution for wage theft and overtime pay violations which it maintains as exclusively as civil matters while ensuring theft itself from a merchant in turn is always a criminal matter through the primacy of private property.
to learn more i recommend reading Marx's "Das Kapital," albeit its rather academic. Engels "wage labor" is also a good read to understand why housing is so persistently unaffortable but helps to understand why any other good or service slowly becomes so as well.
The problem is we are one step beyond capitalist exploitation as described by Marx - basically the surplus which fatcat industrialists extract from the laborer does not really exist - you have to compete in the market with others who do the same, and offer things at the lowest possible margins, and if you need to be big enough to get capital in, you have investors who demand their profits.
So basically you are squeezed between the public demanding lower prices and the investors demanding record returns. If you are not a monopoly, that is an impossible ask
Basically the only truly profitable businesses left out there is selling hopes and dreams to investors, and shovels to those who build them, which just about describes tech & AI, with companies who regularly manage to 10x their valuations (and P/E ratios)
Marx fails to imagine a world in which labor actually has little to no value.
His worldview is primarily that capitalists 'steal' the valuable labor. However it doesn't seem that that is actually the world we are in. Instead the intrinsic value of human labor seems to be slowly trending towards zero.
And it kind of makes sense, same has happened with oxen labor, horse labor, etc.
Isn’t it the complete opposite? i.e. high automatization means that a single worker can create many times more value than before. However it reduces the demand for labor and worker bargaining power. So companies have no incentive to pair “fair” wages.
It doesn't seem like the value of human labor is going away. If you look at luxury goods, they're still "handmade". Telecoms still advertise human representatives. Nursing homes still charge massive amounts for personal service.
What's changing is how much of that surplus value is captured by the workers doing the labor.
> Workers enjoy highest living standards of any time in history.
It's entirely possible for someone to be paid a lot in absolute terms, while at the same time paid very little relative to the value that they produce which is monetarily captured by their organization. The truth of the first does not invalidate the injustice of the second.
This is clearly heading in a direction where the USA is going to elect a huge number of socialists, who in turn are going to enact massive taxes on billionaires and break up the monopolies.[1]
This is why I think the billionaire oligarchs are literally mentally ill. They've won the entire game. They control everything. They live like gods, they twitch a pinky and millions dance.
But their response to all of this power is to seek even more of it, destabilizing the very system that has them on top. You would think self-preservation would kick in. The fact that it is not and that their greed knows apparently no bounds is going to lead to their extinction.
For a long time I thought it was hyperbolic to say so, but no longer -- the billionaires are mentally ill.
I very much doubt that. There isn't enough class solidarity to pull it off.
There will be a few who brand themselves as such. But actually seizing the means of production and handing them over to the people? -- The oligarchs will burn this country to the ground before they permit that to happen.
It would of course be lose-lose for everyone. But if a significant proportion of the population starts believing (rationally or not) that they have nothing left to lose it could be problematic.
I find this metric misleading. Where is the extra money going? To whom? Turns out most of it is not going to billionaires. Bulk of it is going to future investments. If we choose not to do that, we lose out on future gains.
It's not naive, it's near optimal. The system rewards people who've done well at capital allocation with more capital to allocate, and takes capital away from those who've done poorly at it. And there's no better predict of future performance at allocating capital than past performance.
> Parking and speeding tickets should have income brackets, at least
AFAIK in some countries this exist but my case is more capitalist oriented. Rich people obviously can pay more since they keep accumulating wealth. It is an obvious sub optimal pricing since the low and even middle class rent/mortgage and other services quickly approaching the most they can pay so they can’t actually save and make wealth.
Now consider this against the rising productivity-pay gap that has been widening since teh 1970s [1].
The big picture here is increasing wealth inequality and that has been on steroids since the pandemic.
The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
But even if that's true, don't you want to live in a society where you don't need armed guards at your house and you don't need armed escorts to go anywhere? Because that's what we're heading towards. One of the problems with American society (in particular) being so car-centric is that it lets people insulate themselves from the rest of society more easily. In cities like NYC you're forced to see and deal with the less fortunate. You can't hide from it so easily.
We don't need trillionaires. We need to raise basic living standards so people have food and shelter and we don't need to separate society into slums and armored compounds.
> The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
Software engineers are a special kind of stupid: the kind that thinks they're smarter than everyone else.
Not even just Republicans, unfortunately. The generation of Americans who grew up in the Cold War were inundated with propaganda about how socialism would destroy America, and then go and say things like this https://www.nytimes.com/2026/06/26/us/politics/moderate-demo...
The actual labor share of income is significantly higher when you include employer contributions to employee health insurance premiums. Healthcare costs have been rising faster than overall inflation for decades, and while many of those costs are passed on to employees the employers have also absorbed a significant chunk. If we want to increase the labor share then we'll drive down healthcare spending.
And no, there's no simple solution to this problem. The notion that something like "Medicare for All" would solve the problem is a total fantasy, disconnected from actual US healthcare economics. Any real solution will have to work on multiple angles including preventive care, PBMs, provider wages, rationing, drug prices, fraud, malpractice insurance, interoperability technology, etc.
Why wouldn't a single-payer solution work? The margin that the insurance companies take for themselves seems like a good place to start. From there it would spiral out to the third to half of time that all of the clinical staff spend just dealing with insurance issues and insurance billing.
I'm not necessarily opposed to a single-payer system but the margin that for-profit insurance companies take is a tiny fraction of overall healthcare spending. You could zero it out and it would barely move the needle. And many of the largest commercial health plans such as most Blue Cross Blue Shield Association members are non-profit. There is literally no margin.
Provider organizations spend a huge amount of effort dealing with Medicare and Medicaid, which are pretty close to being a "single-payer solution" already in many cases. From an administrative overhead perspective they aren't always easier to work with than commercial health plans. Plus they have enormous problems with fraud, waste, and abuse.
There are countries in Europe which have entirely privatized healthcare systems (not even medicare/medicaid equivalents). US tried adopting some of their practices with Obamacare and even that didn’t work out. Singlepayer isn’t really necessary to have a reasonably affordable and accessible healthcare system proper regulation is.
insurance issues are provider and insurer going back and forth detrmining if doctors assessment of necessity is agreed upon.
i am not familiar with universal system. In that system if your doctor thinks something is medically necessary then thats the end of it and its gets done?
You're citing some of the results of a runaway healthcare industrial complex, such as drug prices, as reasons why the thing that would keep such a complex from emerging won't work.
Employers might be contributing more to healthcare costs, but that's because they have to in order to keep coverage for their employees at all as premiums increase, and individual out-of-pocket costs are still rising as a result of coverage denial and high deductibles.
While healthcare spending isn’t included in some economic measures like wages (which has contributed to the distorted productivity-pay gap discourse), labor share as discussed in this article is actually calculated using total compensation, the “total of payments to labor to produce output, including wages, benefits, and other monetary or nonmonetary payments,” which includes employer contributions to medical care not just wages and salaries.[0] They do discuss payroll share later on though, which doesn’t include non-wage compensation.
I've built and audited medical billing systems and billing practices. It isn't an economics issue in a traditional sense. Infact it would drastically reduce complexity of these systems and payments over time, even allowing private insurers to exist but have to compete with a base general coverage. (many smarter people than me at princeton did economics showing this worked out as a net less expensive than what we are doing now) The biggest reason why its not the simplistic solution, is politics of all the middle men (me) making exponential returns from solutions to these systemic issues.
Too much money in the system being flawed, look at pricing for any HIPAA safe products and thats just technology. Money is so hard to get for healthcare providers it is its own industry of revenue cycle management and thrid party billers. Most of these physician lead practices charge more is because planning your account around reemburcement cycles from insurance companies are 30-120 days if your lucky is an advanced accounting problem. (Thats excluding complexities of audits, LOPs, network rates etc.) Medicare/medicaid the fraud side has lots of tiny wins through leaning on tax information more, taking the model from the successful basic income studies and trials worked out.
Do other countries' state healthcare system costs count towards their labor share of income? If not, it seems sensible not to account for them that way in the US, or you're creating a much more serious apples and oranges problem for international statistics (which are often cited/compared for these figures)...
> If we want to increase the labor share then we'll drive down healthcare spending.
It may not be simple but it's clear the United States is doing something catastrophically wrong. All the other healthcare systems on the planet in developed countries have problems, sure. But we spend magnitudes more money to receive middling-to-shit healthcare. Medical debt and bankruptcy is a unique American problem that also happens to be the most reliable way for otherwise productive and prosperous members of our society to end up fucking homeless. Because they got SICK. I rarely use the word "evil" but that really fits IMO.
Like you cannot tell me with a straight face that the insurance industry couldn't be blown the fuck off the map tomorrow and literally everyone who doesn't own an insurance company isn't instantly better off.
If the insurance companies disappeared tomorrow, presumably all medical care is paid for at point of use by patients? That would mean stochastically facing catastrophic bills from providers. I am sympathetic to the idea that healthcare providers and systems here should be making no more than in, say, Europe, but an orthopaedic surgeon being paid the $300k USD-equivalent in Germany instead of his $750k USD income today at median would be very unhappy.
Removing a useless middleman party that needs a profit margin, and removing the perverse incentives of them having to prove their value thus having inflated prices with fake discounts, and centralising all healthcare purchasing power in a single entity, is absolutely going to solve a lot of challenges US healthcare faces
I strongly agree that socializing the healthcare industry will not help in any way. To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance. Anyway, with respect to the labor share of income, that is not correct. Employer contributions to employee health insurance premiums are included in the labor share.
> To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance.
It fails to follow logically that one specific way the government got involved that drove costs up means that any possible intervention is worse than completely being hands-off. How do you explain pretty much every other developed country in the world having more government involvement but lower costs than the US?
Is there a reference you can cite with corrected numbers? Honestly this sounds like excuse-making, especially when used as a jumping point into a decidedly partisan take (complete with scare quotes!) on the essentially unrelated subject of public health care financing.
The idea seems to have merit, but it's unconvincing to people outside your bubble and I'm dubious.
People are misreading the conclusion - the Covid related drop is normal and matches previous episodes, but the massive overall drop since 2000 is not.
The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
This is consistent with the observation that the top 10% have captured a disproportionate share of GDP growth over the past few decades.
https://equitablegrowth.org/new-data-reveal-how-u-s-economic...
"The past three economic expansions have largely benefitted the top 10 percent. In each, the top decile received between 47 percent and 59 percent of all income growth in the expansion."
Also note: Labor share has declined similarly across OECD countries for several decades.
Automation, robots, software etc. they are all capital share.
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> amount of labor being generated per person has not really changed
not true, labor productivity has been steadily increasing: https://fred.stlouisfed.org/series/OPHNFB
workers are simply capturing less of the economic value generated by their labor.
Fair, but the year over year growth of labor productivity has been really consistent, as has consumer prices:
https://fred.stlouisfed.org/graph/?g=tjto
So in terms of how much consumers are making in relation to their expenses, it's been remarkably steady this whole time.
Chart goes up, but you really need to look at percent change. Over the last 25 years it's averaged about 2%
observation_date OPHNFB_PC1
2000-01-01 2.99256
2001-01-01 2.58092
2002-01-01 4.27146
2003-01-01 3.68422
2004-01-01 2.97991
2005-01-01 2.18582
2006-01-01 0.99665
2007-01-01 1.58927
2008-01-01 1.30737
2009-01-01 4.07061
2010-01-01 3.15513
2011-01-01 -0.02491
2012-01-01 0.93870
2013-01-01 0.59941
2014-01-01 1.00795
2015-01-01 1.27023
2016-01-01 0.61567
2017-01-01 1.49513
2018-01-01 1.40965
2019-01-01 2.13337
2020-01-01 5.30657
2021-01-01 2.06281
2022-01-01 -1.46786
2023-01-01 2.13277
2024-01-01 2.91010
2025-01-01 2.25154
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The chart you're showing, absolutely reflects the reality of some of the most productive segments of our economy.
Ford now makes more cars, with fewer people. Sears used to have people who took photos, laid out catalogs, opened envelopes (with checks in them).... Amazon has none of that. We replaced switch board operators, with mechanical, then digital switching. More calls routed, fewer people required. go back 45 years and "draftsmen" was a job - replaced by auto cad.
All these industries have seen massive productivity.
Are the people flipping burgers more productive? Plumbers? Welders? Teachers? Nurses? -- to some extent yes, because of technology but not to the same extent as the previous businesses. Anything that qualifies as "service economy" work has not seen the same gains as Ford (see: https://www.aei.org/carpe-diem/phenomenal-gains-in-manufactu... )
Is this inflation adjusted?
> The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
My understanding is that "fixed" costs like rent and groceries have gone up and taken more of people's budgets, while wages failed to catch up with this inflation.
If that's the case, it's markedly different from "situation on the ground is unchanged". I don't know how the overall pie is doing, but it has not grown enough to compensate for the labor share drops shown in the article. The slice on my plate is certainly lighter.
Since 2000 the biggest economic change is software. While most workers doing physical jobs have only made themselves slightly more efficient (or maybe mass immigration has maybe even reduced efficiency in some sectors), some workers (tech workers) have made themselves hundreds or thousands of times more efficient and captured the gains as equity (either in their own startup, their job, etc...). The positive is that growth overall has still lifted living the average living standard.
>the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us
I don't see where the article made that claim. Are you making it yourself and can you support it? That sounds like something that would happen when technology improves. What the article does do, is pose a question that it never answers: "When the labor share falls, it means that productivity, prices, or both [which?] are growing faster than wages."
The Fed tracks this: https://fred.stlouisfed.org/graph/?g=tjto
Unit cost on labor has increased at a more or less steady pace this whole time. Ergo, it's not so much that labor is decreasing as other things are increasing faster.
It's hard to argue that technology is increasing labor productivity an order of magnitude faster than it was in the 50s. It's more likely something else in the dataset (returns on capital/rent) is exploding in value.
I don't know which people you're referring to, but the conclusion is pretty clear: the _share_ of the total pie captured by labor is shrinking. Productivity is increasing, but capital is capturing all, or almost all, the benefits of that increased productivity and economic growth.
AI is going to further exacerbate this inequality.
Time to re-read Capital In the 21st Century.
We have one of the worlds most prosperous economies, and half of the US is living in abject poverty while quality of life for everyone is decreasing.
I'm going to go on a limb and say half of the US is not living in abject poverty? Nor can I get behind the idea that quality of life for folks is on the down trend.
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"Abject poverty" is currently defined as living on less that $3 a day and dealing with things like chronic hunger and exposure.
The best approximation would be the homeless population in the US (about 500k people), but even then most homeless would not even qualify.
"Half" is a gross exaggeration.
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What's your definition of "abject poverty"?
I find it hard to believe that half the US would meet the criteria for any reasonable definition.
>and half of the US is living in abject poverty
Source? All the ones I know of use questionable methodology like: "being able to afford a 2 bedroom apartment at median wage".
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> half of the US is living in abject poverty
Anyone who believes this has absolutely no concept of what abject poverty looks like.
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> half of the US is living in abject poverty while quality of life for everyone is decreasing.
The 350 million Americans looking at the top of the US economy and crying need to turn around and take a look at what's behind them.
There are something like 7 billion people behind them, worse off.
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[Citation needed]
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the top 1% have nearly as much income as the bottom 80%
https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
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It's amazing how few people are willing to admit there is a problem. Spend 45 minutes driving around the state I live in talking to random people and it's painfuly obvious this is reality that some. I suppose it's mostly epstein sympathizers who are pushing the narrative that everything is perfect and nothing needs to be done.
>the amount of labor being generated per person has not really changed
im not really understanding what you mean. i dont get how labor is generated, in particular. do you mean to say the amount of total hours dedicated to labor per person or something else?
he's referring to labor productivity, e.g., the economic value produced per unit of labor input. it also _has_ changed significantly, as seen here: https://fred.stlouisfed.org/series/OPHNFB
however, unit labor costs has also been increasing (although they remain variable): https://www.bls.gov/opub/ted/2026/productivity-up-0-3-percen...
Probably to referring to hours worked, eg. https://fred.stlouisfed.org/series/AWHAETP
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It's just rent.
Rent for the homes we live in (including "rent" as mortgage payments to the bank)
Rent passed through as costs to the consumer for the businesses we patronize.
We're stuck at home more affording to be able to do less so the people who own don't have to work.
Indeed. It's a game of monopoly where one person owns all the property, and everyone else is just rolling the dice and, paying rent every turn.
I have a similar PoV. I think rent seeking without sufficient checks is one of the biggest problems in our economy.
But the underlying problem that people aren't paid enough is still true. Outside a few fields, most people are underpaid. It's even more stark when measured against productivity increases during the same time periods. That wealth went somewhere. It wasn't to most people.
People have a tendency to get upset when they realize these kinds of things.
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And it's wild to me how we can't seem to figure out how to bring the cost for this down. Building affordable houses should be our no. 1 priority.
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Benn Jordan just released a new video proposing that we are not in “late stage capitalism” and instead we are currently an offshoot of capitalism called “leverageism”.
In the video he describes how when people like Elon Musk get to the level of wealth that they are at, it becomes far more beneficial for them to take from (or stunt) the spending power of lower classes than it is to add to their own net worth dollar figure - simply put, the former moves the needle far more in their favor than the latter.
Definitely explained the idea of our slice remaining the same while the overall pie around us is getting larger.
*Edit: Benn not Ben
FTA's conclusion:
"Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. <later> ... and they provide little evidence that it will evolve differently from past episodes."
This conclusion seems to be against "this time is different" arguments. Should we be generally encouraged by similarity to past declines pre-2000 or bearish and think that there is more drop to come like the 2000-2007 and 2007-2019 periods they graph out?
I guess there is no way to predict other than check back in after time passes.
Bearish, they are already working as hard as they can to replace everyone with AI or at least Actual Indians playing AI
> I guess there is no way to predict other than check back in after time passes.
Welcome to the dismal science of economics, where the rear-view mirror is crystal clear but the windshield is totally fogged up.
The submitted title is a bit sensationalist given the article’s conclusion:
> Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. First, the labor share’s trajectory post-COVID broadly follows the cyclical patterns observed in earlier recessions, with a decline during the recovery phase that mirrors historical dynamics. Second, the decline in the labor share since COVID is driven primarily by within-industry changes rather than shifts in economic activity across sectors. Taken together, these results suggest that the post-COVID decline follows the same cyclical patterns as earlier recessions and is driven by the same within-industry forces, and they provide little evidence that it will evolve differently from past episodes.
What I find more interesting is the sharp drop around the early 2000s
I don't think so. Opening sentence is this:
> The labor share of income in the U.S. is currently at its lowest-ever level in the post-war period.
Agreed on the 2000 drop though. Would be interesting to read a retrospective on that.
Is it not the dot com bubble pop?
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That most-recent spike during/post-COVID really puts into perspective just how unreasonable low-wage employers were to be so hysterical.
Capital be praised that capital owners are back on top.
May the low-waged ever be trodden upon and forever know their true place.
Those that died or became disabled during covid are mewling degenerates.
Their cries of 'illness', 'poverty', and 'homelessness' are precisely as useless as the wailing and lamentation of women in their menses, a farcical thing to be dismissed and ignored.
May the Fed be ever in your favor, Amen
Highly suggest adding "hysterical" to your internal vocabulary filter.
Not OP. But respectfully disagree. Reads appropriate to me.
"Related to or marked by Hysteria" https://www.merriam-webster.com/dictionary/hysterical
Hysteria being "behavior exhibiting overwhelming or unmanageable fear or emotional excess" which seems to be exactly what OP was trying to say.
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it feels like every share of income is at its lowest except for the ultra wealthy.
It's not necessarily limited to the ultra wealthy, but outside of a few key areas (as someone mentions, those profiting off of the inflationary spike, those in the real estate market, etc) it is more or less the case, yes.
It's not, you're just hanging around the wrong people (or spending too much time on social media comment sections).
How do you know that you're not the one hanging around the "wrong people" to know better? You could just as easily be surrounding yourself with wealthy people as they could be with non-wealthy.
Without data, it just sounds like "my social circle is more indicative of reality than yours". Maybe it is! But maybe not, so it's not particularly convincing
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Source for this statistically?
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It’s not. There are plenty of non-wealthy people who make money from things other than their labor.
Small-time landlords are an example, as would be anyone who owns a small business and draws cash from profits rather than taking a salary.
> non-wealthy
> landlord
If you think these two things are compatible you need to talk to more people outside of your bubble.
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The annoying/sad/infuriating thing is the ultra wealthy don’t have “income.” Technically, according to IRS rules, much of what they experience (housing, food, etc) should be classified as income. But their lawyers and accountants help them keep that looking quite low.
This report is only about wages, so even if the ultra-wealthy reported their real sources of income, they wouldn’t shut up as “labor” the way this defines it.
Capital gains not being considered earned income is simply sensible use of terminology to categorize different ways of amassing purchasing power. For example, in order to carry out the linked analysis.
It has nothing to do with the IRS or taxes.
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even with this scam the top 1% of earners still have more annual income than ~75% of the population
I used to think this - but when I talked to a tax lawyer friend and we walked through the steps they take, usually they're just deferring taxation that does end up getting paid by an entity eventually.
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Not at all. The real estate share of income is probably at its highest among a lot of people who belong to the non-labouring class, but are far from ultra wealthy. But it's nice to have a scapegoat, isn't it?
If you belong to the 'non-laboring class' you are by definition the ultra wealthy. It's wild how much people are willing to slide goalposts to make themselves feel better.
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For what its worth Ross Perot had an ominous take on the effects of free trade back in the 90s with his "giant sucking sound" observation.
The root of this started in the 70s as the New Deal coalition decayed and Keynesian economic theory fell out of favor among the elites.
To be fair their were good reasons at the time to think it wasn't working either.
Worth noting that the Bretton Woods system was -not- quite what Keynes wanted...
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Interesting that most of the decline happened in the 2000s. The graph shows a large decline from ~2000 to ~2008 which continues after the GFC before going up a bit in the 2010s. The drop off since COVID is comparatively small.
Obviously the solution here is for workers to also become shareholders.
The US has historically been quite opposed to the workers becoming shareholders.
Except for all the companies that issue shares and options as part of employee compensation.
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I think this is part of a long term development where technology and globalization slowly erode workers bargaining power. Basically you only build a factory in the US if you can keep labour costs low enough and the manufacturing automated enough so that you can still compete with other manufacturing hubs.
The longer graph (starting at 1947) shows the shift in 2001 on more startlingly
https://fred.stlouisfed.org/series/PRS85006173
Corporate profit vs Labor income divergence (only up to 2018)
https://fredblog.stlouisfed.org/2018/08/corporate-profits-ve...
Fascinating. The 2001 shift aligns well with China's entry into the WTO.
Other countries in the world have manage to keep workers bargaining power in the face of globalization and technological progress.
I think in the case of US literally killing workers and union people is a huge part of why US workers lack power and why US unions are so impotent.[0]
[0] see Battle of Blair Mountain and what work Pinkerton mainly did from its founding to WW2, as examples.
> Other countries in the world have manage to keep workers bargaining power
Such as? They might have managed to maintain it for privileged subgroups of the workforce but not for the average worker.
Are there hollistic analysis? I generate income with my labor, but I also save in retirement and investment accounts. On analysis like this that we typically see, are these two things competing? Are we really just seeing a rise in retirement savings?
Equity should be a normal part of compensation for non-executive employees in addition to their wage/salary and benefits.
There's nothing about being in the C-suite that magically endows one with motivation based upon stock price, but we pretend that there is.
Because labors in China are extremely cheap. And they are getting cheaper and cheaper in last decade, despite the GDP growth.
As a hardware founder, I’ve seen the opposite until very recently. Labor cost has been going up much faster than inflation, at lease in hardware assembly.
Do you have a source?
I don't have time for a longer comment, but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates. The doctor, lawyer, financial advisor, CPA etc. that in past decades would have had his/her income run through a W2 arrangement shifted to becoming a one-person corporation
Exactly. Crazy you are getting downvoted for having the most informed comment here. The other aspect of this is the rise of franchisees in America. Previously, the salary of the manager of a corporate store would be measured as labor income. In a franchise, it would be measured as capital income.
https://bfi.uchicago.edu/insight/research-summary/the-rise-o...
Do you have any evidence for this, at all?
They seem to conveniently not have enough time to provide that in the comment
Sure matches my anecdotal experience.
How much of an effect it has at the national statistical level I'm not sure.
Okay, so say AI & MBAs are successful in replacing the labor spend of corporations on every level? What happens to "the economy"?
It transitions back to a more feudalist state. The series finale to "you will own nothing and be happy."
That is, if they're successful.
That has already happened. The entire industrialized world is feudal. Young workers who are experts in their fields working full time can't afford a simple home. Young business owners who employ several people full time can't afford a simple home.
Is there any reason to believe they won't be?
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Not much. Early economies relied on mutual trade. I give you X and in return you give me Y. Soon we realized that you cannot always give Y in return immediately, so we invented accounting to keep track of your promise to give me Y at some point in the future. As time went by eventually we stopped caring about getting Y back in return and started taking an interest in collecting the promises themselves (i.e. profit).
Why would someone want to collect promises? That seems rather silly, right? What having a lot of promises gives you is social standing. People treat you differently — better — when they give you their promises. If traditional labor goes away, the economy simply becomes you promising to hold those who have things in the highest regard; to be there as their friend when they call for you to. That is the same modern economy we already have but with less steps.
According to the article, automation (including software) and other technology "advancements" are important factors.
I think it's becoming clear that we are reaching a point where UBI must be debated in Congress subsidized by something that doesn't wreck economic growth and probably doesn't target capital investment.
What happens if large cohort of Boomers retires and stop working, instead living on their savings? Labor share of income drops. If you remove this effect, the labor share of income is flat - confirmed by last week's analysis in The Economist.
A lot of this is because people who work for themselves more commonly set up a business for their solo work from what I recall
Yikes. Good to know that labor shares used to rebound after crises, but since the 2000s and the dotcom bubble it has basically been downhill only. So don't expect any of this to get better unless we roll back technology to the last millenium.
It's not the tech but who sees the benefits. The issue at play is the monopolization and concentration of power.
Ie, why can one guy who is insanely wealthy due to stock valuations take loans against that to pull various levers of power. We didn't elect him, we need a way to control that outsized influence.
Not technology - that's only downstream of politics.
No political administration in my lifetime (!) has made policy decisions against the interests of tech monopolists. The closest we got was Lina Kahn's FTC.
Technology isn't the problem. The problem is the generation in governing power through the last 2 decades has no problem burning down the country's future to maintain lavish retirement funds for themselves.
I think it's more nuanced than that. There surely are plenty of cases where that is the case, but it's also a natural effect of hyperfinancialization, which many really do believe to be a "net positive" for the stability it brings. There's also the natural tendency of consolidation and centralization of power, and the natural counter-balance to that has been suppressed. Then you have legislative incompetence, the general failings of scientific governance aggregating over time, and many other structural flaws that are deeply seated and long-running.
We shouldn't just be pointing at the (very much real) stupid greed, there are many rotten components occurring simultaneously.
Could it be because the productivity is up?
The most interesting takeaway I see in the labor share percentage graph is the trend that labor share increases into the recession. Post recession share trends down for a bit.
How much of the trend is due to employment trends vs. printing money for the wealthy to get their hands on it first(and profit) post recession?
By design, no?
Yes by design. Basically just by designating one part of the economy as non-productive consumption economy, and the other part as production economy, they create the justification for inflation - so that the government can have free money and take it from the stupid consumers by decreasing their wealth a little every year should they choose not to spend it, and give it (sorry, invest) to the nice productive entrepreneurial capitalist part of enconomy who will somehow reinvest it allegedly (read: mostly buy up shit the former half needs and sell it back to them at markup), the system has a direct wealth transfer mechanism that points from the poor to the rich, it couldn't be any more shameless and obvious if they tried.
I wonder if labor itself will become an anachronism in the age of AI. Perhaps the future economic landscape will be dominated by capital because everyone will own capital. You will command a small army of agents to do whatever you want. You will no longer need to work for someone. You own small businesses far more than you could possibly operate in the pre-AI era and they will mostly operate autonomously with minimal direction and some guidance from you.
We live in a world with a sever housing crisis - not shortage, as there are usually enough units, people just can't afford them.
One would assume the difficulty of building housing has gone down with the general progress of technology - and if all else fails, you can just do what they did 50, 100 years ago where affordability was far less a struggle - people, who had less income in real terms spent proportionally less on it.
So did society devolve that an unit of industrial output has become more expensive? Or did money and resources just go into a parallel 'rich people economy', that has created a constant drain on the resources of average people?
Assuming your labour contribution to these agents is 'minimal':
Why would you own them, instead of some well capitalized billionaire?
To the extent that you do have capital, why do you assume that your 'minimal direction and guidance' would outcompete a full time specialist working for that billionaire?
It's basic economics; larger firms become progressively less efficient for the same reason that communist command economies are inefficient, because there's no internal price signals to guide resource allocation. So there's a natural cap on how big a firm can get (in information theoretic terms, there's a hard limit on the amount of information a centralized structure can process effectively).
The longer I participate in the economy the more it starts to feel like the end stages of a game of monopoly. There is nothing left to own unless you already are wealthy and the only way to get ahead is luck.
Well yeah. This is why we're calling end-stage capitalism. What's coming looks like technofeudalism.
All companies are rent-seeking. Selling something is no longer a goal.
Prices go up up up up up.
Oligopolies and price fixing is normal.
Monopolies are normal with little/no controls.
People are getting paid a pittance to the work done.
Unions are their weakest in a century.
NLRB is basically frozen due to no quorum on the head board.
Companies routinely scam and lie at multiple places in hiring pipeline. FTC does nothing.
Neither party (Republicans or Democrats), save the DSA, fights for the American people.
Its all coming to a head, and baskets, and guillotines. Anybody who studies history knows what kind of powderkeg this situation is. Its also the reason the Ancient Romans made panem et circunses (bread and circus) cheap or free. You get riots and revolts otherwise.
We should break up monopolies, revoke the vast majority of work visas, end free trade, and unionize.
Thank you for coming to my Ted Talk, please leave a downvote to indicate I caused you emotional distress.
this is relatively unremarkable for those with an understanding of wage, labor, profit, price and capital.
capitalism will always seek to reduce labor cost. during the epoch of neoliberalism it achieved great strides in this by reducing labor power through union busting by both thatcher and reagan in the UK and US respectively. it has also effectively curtailed any increase in the minimum wage for nearly 20 years as well as reduced protections, regulation and prosecution for wage theft and overtime pay violations which it maintains as exclusively as civil matters while ensuring theft itself from a merchant in turn is always a criminal matter through the primacy of private property.
to learn more i recommend reading Marx's "Das Kapital," albeit its rather academic. Engels "wage labor" is also a good read to understand why housing is so persistently unaffortable but helps to understand why any other good or service slowly becomes so as well.
The problem is we are one step beyond capitalist exploitation as described by Marx - basically the surplus which fatcat industrialists extract from the laborer does not really exist - you have to compete in the market with others who do the same, and offer things at the lowest possible margins, and if you need to be big enough to get capital in, you have investors who demand their profits.
So basically you are squeezed between the public demanding lower prices and the investors demanding record returns. If you are not a monopoly, that is an impossible ask
Basically the only truly profitable businesses left out there is selling hopes and dreams to investors, and shovels to those who build them, which just about describes tech & AI, with companies who regularly manage to 10x their valuations (and P/E ratios)
Marx fails to imagine a world in which labor actually has little to no value.
His worldview is primarily that capitalists 'steal' the valuable labor. However it doesn't seem that that is actually the world we are in. Instead the intrinsic value of human labor seems to be slowly trending towards zero.
And it kind of makes sense, same has happened with oxen labor, horse labor, etc.
> And it kind of makes sense, same has happened with oxen labor, horse labor, etc.
Sounds like we should start imagining a world where we don't treat people like literal livestock, and then figure out how to get there fast
Isn’t it the complete opposite? i.e. high automatization means that a single worker can create many times more value than before. However it reduces the demand for labor and worker bargaining power. So companies have no incentive to pair “fair” wages.
Then why does every plumber I know own a yacht
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low skilled human labor is going to zero. high skill approaches infinity.
It doesn't seem like the value of human labor is going away. If you look at luxury goods, they're still "handmade". Telecoms still advertise human representatives. Nursing homes still charge massive amounts for personal service.
What's changing is how much of that surplus value is captured by the workers doing the labor.
Unfortunate to see educated and smart people quote Marx. No serious economist takes him seriously.
Labour theory of value is useless. Falling rate of profit is not empirical. Capitalism didn’t go away as he predicted.
Workers enjoy highest living standards of any time in history.
> Workers enjoy highest living standards of any time in history.
It's entirely possible for someone to be paid a lot in absolute terms, while at the same time paid very little relative to the value that they produce which is monetarily captured by their organization. The truth of the first does not invalidate the injustice of the second.
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This is clearly heading in a direction where the USA is going to elect a huge number of socialists, who in turn are going to enact massive taxes on billionaires and break up the monopolies.[1]
This is why I think the billionaire oligarchs are literally mentally ill. They've won the entire game. They control everything. They live like gods, they twitch a pinky and millions dance.
But their response to all of this power is to seek even more of it, destabilizing the very system that has them on top. You would think self-preservation would kick in. The fact that it is not and that their greed knows apparently no bounds is going to lead to their extinction.
For a long time I thought it was hyperbolic to say so, but no longer -- the billionaires are mentally ill.
[1] https://work.news/post/project-2031/
I very much doubt that. There isn't enough class solidarity to pull it off.
There will be a few who brand themselves as such. But actually seizing the means of production and handing them over to the people? -- The oligarchs will burn this country to the ground before they permit that to happen.
It would of course be lose-lose for everyone. But if a significant proportion of the population starts believing (rationally or not) that they have nothing left to lose it could be problematic.
Remember Occupy Wall Street? Back then the oligarchs were somewhat scared.
I find this metric misleading. Where is the extra money going? To whom? Turns out most of it is not going to billionaires. Bulk of it is going to future investments. If we choose not to do that, we lose out on future gains.
Who owns the capital for those future investments? Who will receive returns on those investments?
Speculation or actual investment? Assuming that the allocation of capital is somehow aligned with what’s optimal for the economy/society seems naive
It's not naive, it's near optimal. The system rewards people who've done well at capital allocation with more capital to allocate, and takes capital away from those who've done poorly at it. And there's no better predict of future performance at allocating capital than past performance.
buy shares of companies with any excess money you have and your share will grow
And yet for some reason all the algorithmic pricing targets the laborers, when apps hunt for whales they target teenagers. Ridiculous.
There is a need for proper pricing for the rich, i.e. Elon can pay a million dollars per meal. Someone is leaving money on the table.
Love this.
Parking and speeding tickets should have income brackets, at least.
In the early Internet I saw this thing, no idea if it’s true but it sounds good (someone can math check it), goes something like:
A person pays $2 to play basketball on a public court.
Michael Jordan gets paid $2k to play on the same one.
A person pays $100 for basketball shoes.
Michael Jordan gets paid $100k to wear the same ones.
A person pays $40 to go see a basketball game.
Jordan gets paid $400k to attend the same game.
Michael Jordan makes about $5 per second.
If Michael Jordan saved all his money without spending a penny for 250 years…
He wouldn’t even have half as much as Bill Gates!
It made me think differently about money and consumer spending.
> Parking and speeding tickets should have income brackets, at least
AFAIK in some countries this exist but my case is more capitalist oriented. Rich people obviously can pay more since they keep accumulating wealth. It is an obvious sub optimal pricing since the low and even middle class rent/mortgage and other services quickly approaching the most they can pay so they can’t actually save and make wealth.
Now consider this against the rising productivity-pay gap that has been widening since teh 1970s [1].
The big picture here is increasing wealth inequality and that has been on steroids since the pandemic.
The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
But even if that's true, don't you want to live in a society where you don't need armed guards at your house and you don't need armed escorts to go anywhere? Because that's what we're heading towards. One of the problems with American society (in particular) being so car-centric is that it lets people insulate themselves from the rest of society more easily. In cities like NYC you're forced to see and deal with the less fortunate. You can't hide from it so easily.
We don't need trillionaires. We need to raise basic living standards so people have food and shelter and we don't need to separate society into slums and armored compounds.
[1]: https://www.epi.org/productivity-pay-gap/
> The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
Software engineers are a special kind of stupid: the kind that thinks they're smarter than everyone else.
55%? Ew. We can get it even lower. I want my profits.
I am John Capitalism and I revoke the USA's permission to use my name until they crush labor share of income below 50%.
And the Republic response to this is "soc1lism bad!!"
Not even just Republicans, unfortunately. The generation of Americans who grew up in the Cold War were inundated with propaganda about how socialism would destroy America, and then go and say things like this https://www.nytimes.com/2026/06/26/us/politics/moderate-demo...
Yeah. The boomers are a real problem.
The actual labor share of income is significantly higher when you include employer contributions to employee health insurance premiums. Healthcare costs have been rising faster than overall inflation for decades, and while many of those costs are passed on to employees the employers have also absorbed a significant chunk. If we want to increase the labor share then we'll drive down healthcare spending.
And no, there's no simple solution to this problem. The notion that something like "Medicare for All" would solve the problem is a total fantasy, disconnected from actual US healthcare economics. Any real solution will have to work on multiple angles including preventive care, PBMs, provider wages, rationing, drug prices, fraud, malpractice insurance, interoperability technology, etc.
Why wouldn't a single-payer solution work? The margin that the insurance companies take for themselves seems like a good place to start. From there it would spiral out to the third to half of time that all of the clinical staff spend just dealing with insurance issues and insurance billing.
I'm not necessarily opposed to a single-payer system but the margin that for-profit insurance companies take is a tiny fraction of overall healthcare spending. You could zero it out and it would barely move the needle. And many of the largest commercial health plans such as most Blue Cross Blue Shield Association members are non-profit. There is literally no margin.
Provider organizations spend a huge amount of effort dealing with Medicare and Medicaid, which are pretty close to being a "single-payer solution" already in many cases. From an administrative overhead perspective they aren't always easier to work with than commercial health plans. Plus they have enormous problems with fraud, waste, and abuse.
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There are countries in Europe which have entirely privatized healthcare systems (not even medicare/medicaid equivalents). US tried adopting some of their practices with Obamacare and even that didn’t work out. Singlepayer isn’t really necessary to have a reasonably affordable and accessible healthcare system proper regulation is.
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insurance issues are provider and insurer going back and forth detrmining if doctors assessment of necessity is agreed upon.
i am not familiar with universal system. In that system if your doctor thinks something is medically necessary then thats the end of it and its gets done?
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You're citing some of the results of a runaway healthcare industrial complex, such as drug prices, as reasons why the thing that would keep such a complex from emerging won't work.
Employers might be contributing more to healthcare costs, but that's because they have to in order to keep coverage for their employees at all as premiums increase, and individual out-of-pocket costs are still rising as a result of coverage denial and high deductibles.
While healthcare spending isn’t included in some economic measures like wages (which has contributed to the distorted productivity-pay gap discourse), labor share as discussed in this article is actually calculated using total compensation, the “total of payments to labor to produce output, including wages, benefits, and other monetary or nonmonetary payments,” which includes employer contributions to medical care not just wages and salaries.[0] They do discuss payroll share later on though, which doesn’t include non-wage compensation.
[0] https://www.bls.gov/opub/hom/opt/calculation.htm
I've built and audited medical billing systems and billing practices. It isn't an economics issue in a traditional sense. Infact it would drastically reduce complexity of these systems and payments over time, even allowing private insurers to exist but have to compete with a base general coverage. (many smarter people than me at princeton did economics showing this worked out as a net less expensive than what we are doing now) The biggest reason why its not the simplistic solution, is politics of all the middle men (me) making exponential returns from solutions to these systemic issues.
Too much money in the system being flawed, look at pricing for any HIPAA safe products and thats just technology. Money is so hard to get for healthcare providers it is its own industry of revenue cycle management and thrid party billers. Most of these physician lead practices charge more is because planning your account around reemburcement cycles from insurance companies are 30-120 days if your lucky is an advanced accounting problem. (Thats excluding complexities of audits, LOPs, network rates etc.) Medicare/medicaid the fraud side has lots of tiny wins through leaning on tax information more, taking the model from the successful basic income studies and trials worked out.
Do other countries' state healthcare system costs count towards their labor share of income? If not, it seems sensible not to account for them that way in the US, or you're creating a much more serious apples and oranges problem for international statistics (which are often cited/compared for these figures)...
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> If we want to increase the labor share then we'll drive down healthcare spending.
It may not be simple but it's clear the United States is doing something catastrophically wrong. All the other healthcare systems on the planet in developed countries have problems, sure. But we spend magnitudes more money to receive middling-to-shit healthcare. Medical debt and bankruptcy is a unique American problem that also happens to be the most reliable way for otherwise productive and prosperous members of our society to end up fucking homeless. Because they got SICK. I rarely use the word "evil" but that really fits IMO.
Like you cannot tell me with a straight face that the insurance industry couldn't be blown the fuck off the map tomorrow and literally everyone who doesn't own an insurance company isn't instantly better off.
If the insurance companies disappeared tomorrow, presumably all medical care is paid for at point of use by patients? That would mean stochastically facing catastrophic bills from providers. I am sympathetic to the idea that healthcare providers and systems here should be making no more than in, say, Europe, but an orthopaedic surgeon being paid the $300k USD-equivalent in Germany instead of his $750k USD income today at median would be very unhappy.
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The data here would already include healthcare contributions.
Removing a useless middleman party that needs a profit margin, and removing the perverse incentives of them having to prove their value thus having inflated prices with fake discounts, and centralising all healthcare purchasing power in a single entity, is absolutely going to solve a lot of challenges US healthcare faces
Yeah, I guess the rest of the developed world doesn’t really ‘get it’ - fools!
Could America be wrong? No, no, it's the other countries!
they get subsidized by usa pharma industry. Their costs will rise if pharma prices are negotiated by govt here too.
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I strongly agree that socializing the healthcare industry will not help in any way. To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance. Anyway, with respect to the labor share of income, that is not correct. Employer contributions to employee health insurance premiums are included in the labor share.
> To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance.
It fails to follow logically that one specific way the government got involved that drove costs up means that any possible intervention is worse than completely being hands-off. How do you explain pretty much every other developed country in the world having more government involvement but lower costs than the US?
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> I strongly agree that socializing the healthcare industry will not help in any way.
It would eliminate the tens of billions that are wasted on insurance company profits.
Is there a reference you can cite with corrected numbers? Honestly this sounds like excuse-making, especially when used as a jumping point into a decidedly partisan take (complete with scare quotes!) on the essentially unrelated subject of public health care financing.
The idea seems to have merit, but it's unconvincing to people outside your bubble and I'm dubious.