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You're assuming that productivity gains are something like normally distributed while income gains have (obviously) not been. But I'm not sure that's true. Loo

You're assuming that productivity gains are something like normally distributed while income gains have (obviously) not been. But I'm not sure that's true. Look at the composition of the top 1% of earners. The Times as always has a helpful infographic: http://www.nytimes.com/packages/html/newsgraphics/2012/0115-one-percent-occupations/index.html?ref=business http://www.nytimes.com/packages/html/newsgraphics/2012/0115-... Huge chunks (certainly an overwhelming majority!) aren't managers or CEOs in a position to "capture" the value from the productivity of their underlings. In fact, it seems like your best bet is to be a doctor with his own practice. His productivity (or at least the market value of his services) has skyrocketed as medical science has improved, and indeed he has captured much of those gains. Ditto for, say, a Google engineer today vs. a DEC engineer of 30 years ago. Also, a bunch of the profit from those productivity gains has surely made its way into equity prices and dividends. Nobody needs negotiating leverage to access those, just savings and investment. And indeed, workers today wisely take a larger % of their earnings in benefits like stock options and 401(k) matches, not wages.

rayiner 13y ago
If I understand your argument correctly, you're saying that the results might be explained by the vast majority of productivity gains happening among the 1%, so that the median worker's productivity hasn't really increased as much as the overall average productivity. I don't think that's correct, for two reasons: 1) The 1% necessarily account for a small percentage of workers, and thus are unlikely to account for the huge increases in overall productivity we're seeing. A doctor is not 10x as productive as he was 30 years ago. 2) The theory is inconsistent with what we know about specific segments of the economy. E.g. in the U.S., manufacturing output per worker has skyrocketed in the last 30 years: http://mjperry.blogspot.com/2010/02/us-manufacturing-ouput-per-worker.html http://mjperry.blogspot.com/2010/02/us-manufacturing-ouput-p.... Manufacturing worker productivity has doubled in less than 20 years, but wages have totally stagnated. It is true that wage comparisons are a little misleading because they don't take into account benefits. But the fact of the matter is that your average worker doesn't get benefits like stock options or 401(k) matching. Less than half of Americans even half a 401(k) plan, much less matching employer contributions: http://www.cnbc.com/id/100578392 http://www.cnbc.com/id/100578392. The vast majority of workers simply do not own enough stock or equity to more than marginally offset how wages have failed to keep pace with productivity gains. You're right that the bulk of the gains from improved productivity have made their way into equity prices and dividends, but that's nothing more than another way of saying what I said: capital owners are capturing an increasing percentage of the value generated by labor, as a result of the decreased negotiating power of labor. Sure, anyone can buy stock, but as a practical matter a small fraction of the population owns the vast majority of stocks and business equity: http://www2.ucsc.edu/whorulesamerica/power/wealth.html http://www2.ucsc.edu/whorulesamerica/power/wealth.html. The top 10% owns 88% of all non-housing investment assets. The top 1% owns half. Note that this point is independent of the "fairness" of that asset distribution in the first place. A small percentage of the population has always owned most of the wealth. That's not necessarily the troubling part. The troubling part is that the fraction of the value generated by labor that is captured by the laborers rather than the owners of capital is shrinking. That's consistent with a deteriorating negotiating position, not a stable one.

rayiner 13y ago

If I understand your argument correctly, you're saying that the results might be explained by the vast majority of productivity gains happening among the 1%, so that the median worker's productivity hasn't really increased as much as the overall average productivity. I don't think that's correct, for two reasons: 1) The 1% necessarily account for a small percentage of workers, and thus are unlikely to account for the huge increases in overall productivity we're seeing. A doctor is not 10x as productive as he was 30 years ago. 2) The theory is inconsistent with what we know about specific segments of the economy. E.g. in the U.S., manufacturing output per worker has skyrocketed in the last 30 years: http://mjperry.blogspot.com/2010/02/us-manufacturing-ouput-per-worker.html http://mjperry.blogspot.com/2010/02/us-manufacturing-ouput-p.... Manufacturing worker productivity has doubled in less than 20 years, but wages have totally stagnated. It is true that wage comparisons are a little misleading because they don't take into account benefits. But the fact of the matter is that your average worker doesn't get benefits like stock options or 401(k) matching. Less than half of Americans even half a 401(k) plan, much less matching employer contributions: http://www.cnbc.com/id/100578392 http://www.cnbc.com/id/100578392. The vast majority of workers simply do not own enough stock or equity to more than marginally offset how wages have failed to keep pace with productivity gains. You're right that the bulk of the gains from improved productivity have made their way into equity prices and dividends, but that's nothing more than another way of saying what I said: capital owners are capturing an increasing percentage of the value generated by labor, as a result of the decreased negotiating power of labor. Sure, anyone can buy stock, but as a practical matter a small fraction of the population owns the vast majority of stocks and business equity: http://www2.ucsc.edu/whorulesamerica/power/wealth.html http://www2.ucsc.edu/whorulesamerica/power/wealth.html. The top 10% owns 88% of all non-housing investment assets. The top 1% owns half. Note that this point is independent of the "fairness" of that asset distribution in the first place. A small percentage of the population has always owned most of the wealth. That's not necessarily the troubling part. The troubling part is that the fraction of the value generated by labor that is captured by the laborers rather than the owners of capital is shrinking. That's consistent with a deteriorating negotiating position, not a stable one.