Recovery from the Great Recession has been slow and uneven. Six years in and U3 unemployment is finally down to 5.4%, U6 has dipped below 11%. Why are there so few voices claiming victory and why do their claims ring a bit hollow?
This chart from the Federal Reserve provides a clue. It plots labor’s share – salary and wages – of Gross Domestic Product.
In the postwar years the American economy was doing well. As the chart above shows, American workers’ share of GDP taken as wages and salaries was about 50% in those years. That began to change in the early 70s and today the share of GDP taken as wages and salaries is less than 43%. Productivity continued to rise. GDP continued to grow. But workers were getting a progressively smaller piece of [Continue reading]