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A great many of our problems (in much of the developed world to varying extent) stem from just this. Below: a chart of "share of gross national income from wag

A great many of our problems (in much of the developed world to varying extent) stem from just this. Below: a chart of "share of gross national income from wages", read this as "Labor Share of Income." https://fred.stlouisfed.org/series/W270RE1A156NBEA https://fred.stlouisfed.org/series/W270RE1A156NBEA

randomdata 2y ago
Doesn't that suggest that the working-class is collapsing rather than the-middle class?
- dgb23 2y ago
  Most of the so called middle class are just well paid members of the working class. Small business owners and others who get much of their income via ownership rather than wages/salaries are often indirectly but strongly dependent on the salaries of the working class to stay competitive. So really most people are in the same boat when it comes to these things. It just manifests differently.
  - randomdata 2y ago
    You are right that those who start off being well paid in the working-class tend to buy capital with the differential in pay, and thus move into the middle-class upon doing so. But, as such, still realize the gains on the capital side, so the decline on the wage side is not the whole picture for them.
- wnc3141 2y ago
  I don't think necessarily, it just describes of the national productivity, how much of that produce is allocated toward labor rather than capital. (wealth generated through assets vs. wages) The middle class owning more assets than working class sure is better off. But both derive most of their income through wages rather than assets.
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fiachamp 2y ago
That share of income from wages started its downward trajectory in 1971, when the US removed the gold standard and money-printing replaced hard money. The result was a man-manipulated interest rate fueled economy. Low interest rates benefit existing asset holders the most since they most definitively increase asset prices. Think about the simplest discounted cashflow, a perpetuity. When you change the discount rate r from 4% to 1%, the perpetuity value increases by 4x.
- genewitch 2y ago
  I've heard the gold theory a lot, but my current best theory is it wasn't until credit cards became ubiquitous that wages stagnated and the debt treadmill began. There was also a significant population increase in the latter half of the century, there - but forget looking at milk prices or gasoline prices - look at a ford mustang, or a motorhome - or even housing. Once a certain segment of the population realized that real estate was "undervalued" relative to the potential for collecting rent on the undervalued property - yeah. rent goes up, wages don't at the same rate, more credit card debt. High debt means you're paying nearly all interest, so that ain't going down. Oh and does anyone actually remember earning a decent amount of interest at a bank? man, those were the days. 12 month 7% CDs, lol.

randomdata 2y ago

Doesn't that suggest that the working-class is collapsing rather than the-middle class?

dgb23 2y ago
Most of the so called middle class are just well paid members of the working class. Small business owners and others who get much of their income via ownership rather than wages/salaries are often indirectly but strongly dependent on the salaries of the working class to stay competitive. So really most people are in the same boat when it comes to these things. It just manifests differently.
- randomdata 2y ago
  You are right that those who start off being well paid in the working-class tend to buy capital with the differential in pay, and thus move into the middle-class upon doing so. But, as such, still realize the gains on the capital side, so the decline on the wage side is not the whole picture for them.
wnc3141 2y ago
I don't think necessarily, it just describes of the national productivity, how much of that produce is allocated toward labor rather than capital. (wealth generated through assets vs. wages) The middle class owning more assets than working class sure is better off. But both derive most of their income through wages rather than assets.
- deleted 2y ago
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- deleted 2y ago
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fiachamp 2y ago

That share of income from wages started its downward trajectory in 1971, when the US removed the gold standard and money-printing replaced hard money. The result was a man-manipulated interest rate fueled economy. Low interest rates benefit existing asset holders the most since they most definitively increase asset prices. Think about the simplest discounted cashflow, a perpetuity. When you change the discount rate r from 4% to 1%, the perpetuity value increases by 4x.

genewitch 2y ago
I've heard the gold theory a lot, but my current best theory is it wasn't until credit cards became ubiquitous that wages stagnated and the debt treadmill began. There was also a significant population increase in the latter half of the century, there - but forget looking at milk prices or gasoline prices - look at a ford mustang, or a motorhome - or even housing. Once a certain segment of the population realized that real estate was "undervalued" relative to the potential for collecting rent on the undervalued property - yeah. rent goes up, wages don't at the same rate, more credit card debt. High debt means you're paying nearly all interest, so that ain't going down. Oh and does anyone actually remember earning a decent amount of interest at a bank? man, those were the days. 12 month 7% CDs, lol.