3 ms·

I already commented on this; his assumption is that the PCE is "correct" and the CPI is "wrong". I made a criticism of PCE that you did not address; it is merel

I already commented on this; his assumption is that the PCE is "correct" and the CPI is "wrong". I made a criticism of PCE that you did not address; it is merely counting increased health care spending (a significant mechanism of wealth transfer) as "labor share" of national income.

harryh 10y ago
That is not his assumption: This is not one of those “he said, she said” where reasonable people can disagree on whether the PCE or CPI is a better price index. This is a pay/productivity gap being invented by using the slowly moving price index (NDP, which is similar to the PCE) to make worker productivity look better, and the faster moving price index (CPI) to make real wages look lower. That’s not kosher. You need to use the same type of index for both lines on the graph.
- astazangasta 10y ago
  There is no difference between using NDP and GDP; the shift emerges only when you switch between PCE and CPI. It is totally about whether the PCE or the CPI is a better index. We can see this clearly enough from the fact that there is a notch in the graph one way and not the other. If you simply don't believe in wage stagnation, then I'm not sure what this whole conversation has been about.
  - harryh 10y ago
    Wage stagnation is definitely a thing, but it's due to increasing wage inequality between different employees not due to capital grabbing an increasing share of national income. Labor's share is remarkably stable over time: http://taxfoundation.org/sites/taxfoundation.org/files/docs/FF467_charts_5.png http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
    - astazangasta 10y ago
      Getting hard to find this thread again, but I've been enjoying this exchange... While that graph shows labor's share as stable, many others do not, e.g. in this piece by Jared Bernstein: http://economix.blogs.nytimes.com/2013/09/09/why-labors-share-of-income-is-falling/ http://economix.blogs.nytimes.com/2013/09/09/why-labors-shar... Of particular interest to me is that if you look at the BEA numbers, they split 'labor share' into wages and non-wage compensation (benefits, SS, medicare, etc.) - the latter share has climbed over time to 20%, meaning much of the stability in the "wage share" is just increasing money being paid to Medicare. It's not clear what's being measured and not in that chart, but, for example, this St. Louis Fed data shows both an increasing Dividend share of GDP and a declining wage share of GDP: http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-dividends-and-wages-as-percent-of-gdp-since-the-1940s/ http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-divi...
deleted 10y ago
[deleted]

harryh 10y ago

That is not his assumption: This is not one of those “he said, she said” where reasonable people can disagree on whether the PCE or CPI is a better price index. This is a pay/productivity gap being invented by using the slowly moving price index (NDP, which is similar to the PCE) to make worker productivity look better, and the faster moving price index (CPI) to make real wages look lower. That’s not kosher. You need to use the same type of index for both lines on the graph.

astazangasta 10y ago
There is no difference between using NDP and GDP; the shift emerges only when you switch between PCE and CPI. It is totally about whether the PCE or the CPI is a better index. We can see this clearly enough from the fact that there is a notch in the graph one way and not the other. If you simply don't believe in wage stagnation, then I'm not sure what this whole conversation has been about.
- harryh 10y ago
  Wage stagnation is definitely a thing, but it's due to increasing wage inequality between different employees not due to capital grabbing an increasing share of national income. Labor's share is remarkably stable over time: http://taxfoundation.org/sites/taxfoundation.org/files/docs/FF467_charts_5.png http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
  - astazangasta 10y ago
    Getting hard to find this thread again, but I've been enjoying this exchange... While that graph shows labor's share as stable, many others do not, e.g. in this piece by Jared Bernstein: http://economix.blogs.nytimes.com/2013/09/09/why-labors-share-of-income-is-falling/ http://economix.blogs.nytimes.com/2013/09/09/why-labors-shar... Of particular interest to me is that if you look at the BEA numbers, they split 'labor share' into wages and non-wage compensation (benefits, SS, medicare, etc.) - the latter share has climbed over time to 20%, meaning much of the stability in the "wage share" is just increasing money being paid to Medicare. It's not clear what's being measured and not in that chart, but, for example, this St. Louis Fed data shows both an increasing Dividend share of GDP and a declining wage share of GDP: http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-dividends-and-wages-as-percent-of-gdp-since-the-1940s/ http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-divi...

deleted 10y ago

[deleted]