6 ms·

Workers Are Getting a Bit More of the Economic Pie (and Shareholders Less)

49 points by Osiris30 11y ago

grej 11y ago
The article notes that a greater percentage of national income is going to workers now, which may very well be true according to how the accounting is done. However, how much of that is because many large corporations are booking a great deal of their profits outside of the US, reducing the denominator in kind of an artificial way? I didn't see anything in the article that mentioned the potential effects of corporations booking profits to overseas cost centers. The chart the NYT shows depicts worker compensation percentage of national income. I'd be interested to see what overall worker compensation and overall corporate profits look like in inflation-adjusted terms, separately.
- crpatino 11y ago
  Another possibility is to look at the compensation for upper management. C-level officers are usually paid in stock as well as cash, but the staff reporting directly to them are salaried employees. If you actually look at the graph (presented in the same article) it does not look like "the trend is reversing" at all. It rather looks like a very clear downwards trend with a strong cyclic component. So, when the times are good, the salaried bosses might just be handing out productivity bonuses to their reports, and passing the bill to the shareholders.
  - maxerickson 11y ago
    Broad measures of wages are also showing growth.
  - jackcosgrove 11y ago
    Exactly, take away the cyclical component of the wage graph and it's still trending down.
  - No1 11y ago
    > C-level officers are usually paid in stock as well as cash, but the staff reporting directly to them are salaried employees. A great point, but note that the writer considers C-level officers to be workers in this case. The headline might as well be Workers Pay Probably Keeping up with Inflation, Execs Doing Great, but that's not really news.
  - heimatau 11y ago
    Very very true. I'm doing research on this. Chart 3 demonstrates this clearly. Non-management workers are receiving less compensation. http://0-search.ebscohost.com.skyline.ucdenver.edu/login.aspx?direct=true&db=f5h&AN=85698541 http://0-search.ebscohost.com.skyline.ucdenver.edu/login.asp... - Note, sorry it's behind a pay wall. Alt cite: MAGDOFF, F., & FOSTER, J. B. (2013). Class War and Labor's Declining Share. Monthly Review: An Independent Socialist Magazine, 64(10), 1. EDIT: Was able to find a public link, through Google Scholar: http://search.proquest.com/openview/4be2b770b6d137e018c146e52bba4a45/1?pq-origsite=gscholar http://search.proquest.com/openview/4be2b770b6d137e018c146e5...
eli_gottlieb 11y ago
Awesome. It's great to see that things like the Fight For 15 movement and the anti-collusion lawsuit in tech are having an impact. As wages and compensation rise, it'll also be an interesting natural experiment to measure how private R&D spending responds. Productivity growth has been historically low these past few years, and only as short a while ago as 2012 or 2013 private R&D as a percentage of GDP was, according to my google-fu, quite low, while now it's higher. If companies and the government could somewhat coordinate to see that the working-class demand-side of the economy improves its condition while the public and private sector spend money on R&D to improve productivity, the economy could stand a chance of acting remotely healthy some year soon.
djschnei 11y ago
Ah the fixed-pie fallacy... A foundational pillar for so much of today's political rhetoric (on the right and left).
- Retric 11y ago
  Many things like land or political power are fixed. So, income inequality really does have downsides even if the pie get's larger. How much is a 3 BR house in an area with good schools near you?
- antisthenes 11y ago
  It isn't a fallacy if you have even a basic understanding of economics. Unfortunately, most of the layman discourse on the internet seems to blindly follow the mantra of an infinitely expanding economy. While that may be true on an infinite timescale, in the short and medium runs (scale of economic cycles), the pie is indeed fixed.
  - djschnei 11y ago
    I'm a fellow at one of the largest economic think tanks in the world. I've been studying various schools for 25+ years. I have a basic understanding. "On an infinite timescale"? That is literally meaningless. Show me ANY time scale where the pie has been fixed and I'll go away.
    - Retric 11y ago
      To two digit accuracy: Today, May 3rd 2016. This is relevant in the case of disasters as you don't have time to meaningfully increase the number of Generators available etc.
    - logfromblammo 11y ago
      Planck time. 1e-44 seconds.~ Fluctuations in the mass of the pie at shorter intervals would appear to observers within our universe as discontinuous jumps between discrete quantities of pie. Therefore, during that interval, the pie is fixed.~ Now go away.~ On a geologic timescale, pie has just appeared out of nothing, and is now covering the entire planet. On an infinite timescale, by naive extrapolation, the pie will in the future be expanding faster than the universe itself, to the point where a wafer-thin bite of pie will expand and rupture the esophagus before peristalsis can even push it into the stomach, and persons dying from attempted pie consumption will literally explode in a shower of pie.~ Clearly, the parent post was substituting a hyperbolic term for the longest possible economic timescale, where new technologies may be invented and entirely new supply chains built based upon them. It is easy to claim that at that scale, economic growth will continue without bound for as long as human ingenuity can conceive new ideas. At shorter scales, the observable size of the pie does sometimes shrink. And if there are periods when it grows, and periods when it shrinks, then logically, there must be periods when it remains the same size, even if those periods are very short.
deleted 11y ago
[deleted]
Namrog84 11y ago
Maybe I am cynical or naive but if more automation and other things are causing fewer jobs. And then the remaining employees are getting paid more but there are fewer paid workers overall. But that'd cause a rise in compensation of those employeed. Shouldn't this be done differently? Tl;dr; let's fire/automate half the workers. Pay the rest more. And worker Compensation will skyrocket!
- jackcosgrove 11y ago
  The article cited total pay and compensation as a proportion of the economic output. It does not mention median pay increasing for workers, so the situation you're describing may very well be the case.
- collyw 11y ago
  What work has actually been automated away? There is lots of talk about it but I don't see any real evidence of it. As a developer, I can use a decent framework and modern tooling, and I can do what a team of 5 was capable of 10 -15 years ago. My work isn't vanishing. There is more of it if anything.
- harryh 11y ago
  > Tl;dr; let's fire/automate half the workers. Pay the rest more. And worker Compensation will skyrocket! Compensation per worker might skyrocket, but total compensation paid to workers would not. This story is about the latter.
x2398dh1 11y ago
There are no error bars on this chart, and the deviation is so small as a percentage of the total change, that we have no way of knowing if this is signal or noise, so the article is somewhat pointless.
cmdrfred 11y ago
Isn't this phenomenon consistent this this?[0] [0] http://www.ibtimes.com/ceo-pay-corporate-executives-got-raise-2015-despite-faltering-business-performance-2359294 http://www.ibtimes.com/ceo-pay-corporate-executives-got-rais...
6stringmerc 11y ago
>The evidence available so far in 2016 — steady growth in wages and weak earnings for publicly traded companies — suggests that the reversal is continuing this year. ...uhh...the evidence of weak earnings while equities continue to go up, buoyed by systemic cash-infusions by several central banks (Fed, EU, BoJ), shows the entire system is broken. I wonder what the chart would look like between corporate expenditures on payroll vs. stock buybacks since 2008. Just a hunch, but I'd guess percentage wise the investor class is doing just effin' peachy in these conditions. Okay, I found a few numbers to kick around. Here's one little tidbit from the article: >For example, average hourly earnings for nonmanagerial private sector workers rose 2.56 percent in 2015 in a year of very low inflation ...and for contrast, the amount of capital deployed in buyback programs recently: >S&P showed more data signaling that S&P 500 index members increased their buyback totals by 16.3% to $553.3 billion in 2014, versus $475.6 billion in 2013. Hm.
mathattack 11y ago
2 observations... 1) I recall being in an investors meeting in 2007 where the downward trend was pushed as a good thing. (If you're a shareholder, you want to keep the $) 2) The last time it went back towards the workers was during the recession. This tells me that it's more of a story of corporate profit growth than how much people are able to capture. (Corporate profits have more volatility than compensation)
No1 11y ago
> After all, the pay for C.E.O.s and other highly paid people counts in those compensation numbers. Most people consider workers to be rank-and-file employees, not executives. The writer goes on to discount the effect of executive pay on the numbers, but the methodology is far less than scientific, and doesn't really justify the headline.
redwood 11y ago
Doesn't change the fact that investment returns are still getting very generous tax treatment...

49 points by Osiris30 11y ago

grej 11y ago

The article notes that a greater percentage of national income is going to workers now, which may very well be true according to how the accounting is done. However, how much of that is because many large corporations are booking a great deal of their profits outside of the US, reducing the denominator in kind of an artificial way? I didn't see anything in the article that mentioned the potential effects of corporations booking profits to overseas cost centers. The chart the NYT shows depicts worker compensation percentage of national income. I'd be interested to see what overall worker compensation and overall corporate profits look like in inflation-adjusted terms, separately.

crpatino 11y ago
Another possibility is to look at the compensation for upper management. C-level officers are usually paid in stock as well as cash, but the staff reporting directly to them are salaried employees. If you actually look at the graph (presented in the same article) it does not look like "the trend is reversing" at all. It rather looks like a very clear downwards trend with a strong cyclic component. So, when the times are good, the salaried bosses might just be handing out productivity bonuses to their reports, and passing the bill to the shareholders.
- maxerickson 11y ago
  Broad measures of wages are also showing growth.
- jackcosgrove 11y ago
  Exactly, take away the cyclical component of the wage graph and it's still trending down.
- No1 11y ago
  > C-level officers are usually paid in stock as well as cash, but the staff reporting directly to them are salaried employees. A great point, but note that the writer considers C-level officers to be workers in this case. The headline might as well be Workers Pay Probably Keeping up with Inflation, Execs Doing Great, but that's not really news.
- heimatau 11y ago
  Very very true. I'm doing research on this. Chart 3 demonstrates this clearly. Non-management workers are receiving less compensation. http://0-search.ebscohost.com.skyline.ucdenver.edu/login.aspx?direct=true&db=f5h&AN=85698541 http://0-search.ebscohost.com.skyline.ucdenver.edu/login.asp... - Note, sorry it's behind a pay wall. Alt cite: MAGDOFF, F., & FOSTER, J. B. (2013). Class War and Labor's Declining Share. Monthly Review: An Independent Socialist Magazine, 64(10), 1. EDIT: Was able to find a public link, through Google Scholar: http://search.proquest.com/openview/4be2b770b6d137e018c146e52bba4a45/1?pq-origsite=gscholar http://search.proquest.com/openview/4be2b770b6d137e018c146e5...

eli_gottlieb 11y ago

Awesome. It's great to see that things like the Fight For 15 movement and the anti-collusion lawsuit in tech are having an impact. As wages and compensation rise, it'll also be an interesting natural experiment to measure how private R&D spending responds. Productivity growth has been historically low these past few years, and only as short a while ago as 2012 or 2013 private R&D as a percentage of GDP was, according to my google-fu, quite low, while now it's higher. If companies and the government could somewhat coordinate to see that the working-class demand-side of the economy improves its condition while the public and private sector spend money on R&D to improve productivity, the economy could stand a chance of acting remotely healthy some year soon.

djschnei 11y ago

Ah the fixed-pie fallacy... A foundational pillar for so much of today's political rhetoric (on the right and left).

Retric 11y ago
Many things like land or political power are fixed. So, income inequality really does have downsides even if the pie get's larger. How much is a 3 BR house in an area with good schools near you?
antisthenes 11y ago
It isn't a fallacy if you have even a basic understanding of economics. Unfortunately, most of the layman discourse on the internet seems to blindly follow the mantra of an infinitely expanding economy. While that may be true on an infinite timescale, in the short and medium runs (scale of economic cycles), the pie is indeed fixed.
- djschnei 11y ago
  I'm a fellow at one of the largest economic think tanks in the world. I've been studying various schools for 25+ years. I have a basic understanding. "On an infinite timescale"? That is literally meaningless. Show me ANY time scale where the pie has been fixed and I'll go away.
  - Retric 11y ago
    To two digit accuracy: Today, May 3rd 2016. This is relevant in the case of disasters as you don't have time to meaningfully increase the number of Generators available etc.
  - logfromblammo 11y ago
    Planck time. 1e-44 seconds.~ Fluctuations in the mass of the pie at shorter intervals would appear to observers within our universe as discontinuous jumps between discrete quantities of pie. Therefore, during that interval, the pie is fixed.~ Now go away.~ On a geologic timescale, pie has just appeared out of nothing, and is now covering the entire planet. On an infinite timescale, by naive extrapolation, the pie will in the future be expanding faster than the universe itself, to the point where a wafer-thin bite of pie will expand and rupture the esophagus before peristalsis can even push it into the stomach, and persons dying from attempted pie consumption will literally explode in a shower of pie.~ Clearly, the parent post was substituting a hyperbolic term for the longest possible economic timescale, where new technologies may be invented and entirely new supply chains built based upon them. It is easy to claim that at that scale, economic growth will continue without bound for as long as human ingenuity can conceive new ideas. At shorter scales, the observable size of the pie does sometimes shrink. And if there are periods when it grows, and periods when it shrinks, then logically, there must be periods when it remains the same size, even if those periods are very short.

deleted 11y ago

[deleted]

Namrog84 11y ago

Maybe I am cynical or naive but if more automation and other things are causing fewer jobs. And then the remaining employees are getting paid more but there are fewer paid workers overall. But that'd cause a rise in compensation of those employeed. Shouldn't this be done differently? Tl;dr; let's fire/automate half the workers. Pay the rest more. And worker Compensation will skyrocket!

jackcosgrove 11y ago
The article cited total pay and compensation as a proportion of the economic output. It does not mention median pay increasing for workers, so the situation you're describing may very well be the case.
collyw 11y ago
What work has actually been automated away? There is lots of talk about it but I don't see any real evidence of it. As a developer, I can use a decent framework and modern tooling, and I can do what a team of 5 was capable of 10 -15 years ago. My work isn't vanishing. There is more of it if anything.
harryh 11y ago
> Tl;dr; let's fire/automate half the workers. Pay the rest more. And worker Compensation will skyrocket! Compensation per worker might skyrocket, but total compensation paid to workers would not. This story is about the latter.

x2398dh1 11y ago

There are no error bars on this chart, and the deviation is so small as a percentage of the total change, that we have no way of knowing if this is signal or noise, so the article is somewhat pointless.

cmdrfred 11y ago

Isn't this phenomenon consistent this this?[0] [0] http://www.ibtimes.com/ceo-pay-corporate-executives-got-raise-2015-despite-faltering-business-performance-2359294 http://www.ibtimes.com/ceo-pay-corporate-executives-got-rais...

6stringmerc 11y ago

>The evidence available so far in 2016 — steady growth in wages and weak earnings for publicly traded companies — suggests that the reversal is continuing this year. ...uhh...the evidence of weak earnings while equities continue to go up, buoyed by systemic cash-infusions by several central banks (Fed, EU, BoJ), shows the entire system is broken. I wonder what the chart would look like between corporate expenditures on payroll vs. stock buybacks since 2008. Just a hunch, but I'd guess percentage wise the investor class is doing just effin' peachy in these conditions. Okay, I found a few numbers to kick around. Here's one little tidbit from the article: >For example, average hourly earnings for nonmanagerial private sector workers rose 2.56 percent in 2015 in a year of very low inflation ...and for contrast, the amount of capital deployed in buyback programs recently: >S&P showed more data signaling that S&P 500 index members increased their buyback totals by 16.3% to $553.3 billion in 2014, versus $475.6 billion in 2013. Hm.

mathattack 11y ago

2 observations... 1) I recall being in an investors meeting in 2007 where the downward trend was pushed as a good thing. (If you're a shareholder, you want to keep the $) 2) The last time it went back towards the workers was during the recession. This tells me that it's more of a story of corporate profit growth than how much people are able to capture. (Corporate profits have more volatility than compensation)

No1 11y ago

> After all, the pay for C.E.O.s and other highly paid people counts in those compensation numbers. Most people consider workers to be rank-and-file employees, not executives. The writer goes on to discount the effect of executive pay on the numbers, but the methodology is far less than scientific, and doesn't really justify the headline.

redwood 11y ago

Doesn't change the fact that investment returns are still getting very generous tax treatment...