Incredible Shrinking Workers’ Income

June 12th, 2011 at 11:58 pm David Frum | 91 Comments |

| Print

Workers’ share of U.S, national income is collapsing.

Two questions for the Republican presidential candidates:

1) Is this a problem?

2) If yes, what can be done about it?

Recent Posts by David Frum

91 Comments so far ↓

  • TJ Parker

    Isn’t this what is meant by “compete with China” and “let the market decide”?

  • pnwguy


    Even if I don’t always agree with your prescriptions to solve the economic questions, I do applaud that you constantly challenge the GOP orthodoxy about the economic problems of the middle class. That’s especially something the Republicans want to completely ignore the setbacks when they have happened on their watch.

    • Smargalicious

      1) Is this a problem?

      No, it is a market correction that has been long in the waiting. American union thugs artificially inflated worker wages of the last 40 years, and the bubble finally popped with globalization. Why should a corporation pay a union thug $25+ per hour with luxury benefits when it could get the same output from a worker in India or China for only $15 a day?? The math is simple.

      2) If yes, what can be done about it?

      The answer was no. It’s only a problem for American workers who have to deal with a lower standard of living.


      • llbroo49


        You do realize that the average ChInese manufacturing wage per hour is less that $2.00 an hour. Welfare pays better than that.

      • Larz99

        Smarg, Are you just playing devil’s advocate? You cannot seriously be that cold. I don’t know what your life is like, but I hope you’re not as bitter as your posts make you sound.

        • Smargalicious

          Just keepin’ it real, Larz. The union thug wage bubble eventually had to pop, just like the housing bubble. The free market rules.

        • Larz99

          Wow, I don’t know what to say. Your logic is unassailable. I will submit my will to the all powerful corporations now. Thanks for explaining it to me.

      • rucb_alum

        Smarg -

        Your analysis is almost exactly backwards. The American worker is being robbed of nearly $28/hr by the non-productive upper percentiles. If average 1968 wages had kept track with the growth in the economy – as your ‘union thug’ claptrap dictates – then the average hourly wage would be $48 per hour.

        Your prejudice against union-workers displays an astounding inability to face facts.

  • ZigZag

    Seems like a good couple of questions for Mr. Frum as well.

  • mickster99

    So Pawlenty’s solution is to of course eliminate as much as possible taxes on rich people. There. That ought to fix the problem. And fire up the job creating machine just like we had with Reagan and Bush II.

    The Delusional Force is strong for Pawlenty.
    Fools doing the fools dance again.
    We are all in very serious difficulty when a boozo like Pawlenty gets traction for what is basically some pretty insane and off the wall proposals. Or is just be brave and courageous?

  • truffleman2340

    workers’ pay has gone down while ceo pay has gone up. since our current sluggish economic recovery is in part caused by a lack of demand, it would seem that a reversal of this would be more beneficial than concentrating wealth at the top. it would also help us to pay down our debts.

  • tommybones

    The American Dream is dead. Long live the Banana Republic!

  • tommybones

    Does Frum not realize this is due to the economic principles he’s long championed?

    • ottovbvs

      I think Frum has swallowed the camel but continues to have difficulty with a few gnats.

      • NRA Liberal

        I don’t care what they say about Frum…he has come a long way in a short time.

  • Mark Thomson

    You missed what is arguably a more important question – ‘What is the underlying cause”. I don’t know how you would answer the other two questions sensibly without first knowing this.

    • WaltFrench

      Here’s one attempt: the economics say marginal output from labor must have collapsed, even as workers have become better educated over the years, while capital, now over-supplied as indicated by capacity utilization and lack of investing shows, now produces more.

      Somehow, I don’t think that labor has gotten much worse than it was when union membership rates were a couple of times as high. The “thugs” story doesn’t wash. OTOH, both facts neatly comport with the facts observed by Mr. Buffet in today’s NYT: capitalists get to keep so much more of their income that our society has tilted strongly to favoring capital.

      Imagine you have a choice between a down payment on an apartment building or a few years at Harvard Med. Choose the first, and your tax rates can be low, maybe zero. Choose the latter, and you pay a higher fraction of your income than the money guys. Is this even hard?

  • nhthinker

    In the 1950s, Americans were known as frugal productive savers that could out compete any labor resource in the world. The Democrats changed focus to social justice and paying off union bosses and ignored that American labor could no longer be characterized as frugal productive savers.
    Obama focused on paying off political allies in state and local government jobs and union jobs- and the average American also sees payoffs to Wall Street and foreign bankers and decides that the federal government is mostly misused and must be smaller. Larger government is clearly not the answer.

  • NRA Liberal

    Shorter Teapublicans: “No, it’s not a problem that wages are flat, you union thugs got what was coming to you and you non-union thugs never deserved to make more than a Chinese laborer anyhow”.

  • ottovbvs

    This chart just summarises what has been common knowledge for years. The real incomes of the vast majority of Americans has been declining for thirty years apart from a brief uptick during the Clinton presidency. The commencement of the downward trend clearly commenced with the ascendency of supply side economic policies at the start of the Reagan presidency. The data makes all this blindingly clear so this requires the usual brain dead suspects to start assigning the blame to union thugs (despite the fact union movement was in the ascendant until the 80′s), lack of frugality amongst American workers, and if all else fails “It’s a good thing American jobs are being exported to China, American workers deserve it and they’d better get used to it.” This is so puerile the only response it deserves is to point out that there are actually Republicans who are crazy enough to hold such views. Fortunately Frum isn’t one of them and he’s posing what are perfectly valid questions. And pace Mark Thompson anyone giving a response to these questions would obviously lay out the underlying causes which I’d say are fairly well known. What the chart exposes is the totally fraudulent basis of supply side solutions in our post industrial society where 70% of GDP is based on consumer spending. In this economic environment how can economic expansion occur when 80-90% of the country’s citizens are being progressively impoverished. It don’t compute.

  • Rob_654

    Far too many Americans have bought into the rhetoric that we are better than the rest of the world, that we worker harder, are smarter, that our version of capitalism is superior and would grant us a higher standard of living.

    American students are for the most part not even competitive in math, science, etc… and those without the proper education and skills are simply going to be crushed and will live a lower lifestyle going forward.

    Other than telling the Americans the truth that just being an “American” counts for very little for your economic future and that for most Americans the difference between succeeding and falling behind is education (and the correct education) there isn’t much to be said.

    The problem for Republicans is that for many of them this goes against a lot of what they believe and practice – many of them don’t trust science, they disagree with higher education, etc… for those people, well there are few options and most of them will require a lot of luck along with whatever hard work they are willing to do.

  • jg bennet

    start listening to heterodox economists and tariff to inspire companies to bring the jobs back home…..

    smarg you fit the neoliberal profile to a tee with your pay comment and the neoliberals are the ones who got us in this mess.

    The main points of neo-liberalism include:

    THE RULE OF THE MARKET. Liberating “free” enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers’ rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say “an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone.” It’s like Reagan’s “supply-side” and “trickle-down” economics — but somehow the wealth didn’t trickle down very much.

    CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply — again in the name of reducing government’s role. Of course, they don’t oppose government subsidies and tax benefits for business.

    DEREGULATION. Reduce government regulation of everything that could diminish profits, including protecting the environment and safety on the job.

    PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.

    ELIMINATING THE CONCEPT OF “THE PUBLIC GOOD” or “COMMUNITY” and replacing it with “individual responsibility.” Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves — then blaming them, if they fail, as “lazy.”


    When you put consumption over production the wealth of a nation is drained and that is a historical/scientific fact and the US is a perfect example…….

    Between 1860 and 1914, Great Britain, which began the era with an economy twice the size of ours, ended it with an economy not half the size of ours. Britain worshipped at the altar of free trade, while America practiced protectionism from Lincoln to McKinley to Teddy Roosevelt to Taft. Tariffs averaged 40 percent and U.S. growth 4 percent a year for 50 years.

    Protectionism has been behind the rise of every great power in modern history: Great Britain under the Acts of Navigation up to 1850, the America of 1860 to 1914, Germany from 1870 to 1914, Japan from 1950 to 1990 and China, which has grown at 9 percent a year for a decade. As China demonstrates, it is a mistake to assume free trade, or even democracy, is indispensable to growth…..

    It is distinctly clear that our dominate economic policies are destroying our economy but neoliberals do not want to let go of their religion…..

  • SteveThompson

    In the United States, the difference between the salaries of CEOs and their employees is becoming increasingly disparate. American CEOs on average took home 263 times the salary of their average worker. To add insult to injury, CEOs that punted more of their workers took home 42 percent more than their counterparts who laid off fewer workers.

    Here is an article showing the massive chasm that is growing between the haves and have-nots of the corporate world:

  • vishnu

    earth to David: to the Republicans and assorted right-wingers this has never been a problem.. if they ever get asked about this, they would simply respond the answer is giving more tax cuts to the rich… the Reps have no solution to any economic problems — ever, except always just giving more money to rich folks, and that’s it….

    the only way to start seriously tackling problems of income inequality in this country — which are worse than any in other modern democracy, and have now even reached third-world proportions — is to vote Republicans out of office….

  • jg bennet


    the dems are just as bought off as the GOP and are as big a part of this debacle as the GOP,the GOP is just more blatant in their neoliberalness.

    what we really need is a lincoln republican to run on an independent ticket and divide and conquer both parties. i think america is ready for a non party/non politician in the white house. both parties follow the neoliberal creed and that creed is what needs to be voted out of office.

  • baw1064

    I suspect the Republican candidates’ answer to David’s questions will be the following:

    “Don’t worry about this graph, the gay communist immigrants are coming to take your guns!”

  • jg bennet


    According to his Iron Law of Wages, wages could never rise beyond subsistence levels. Ricardo explained profits as a return on capital, which itself was the product of labour.

    The Iron Law of Wages, is a proposed law of economics that asserts that real wages always tend, in the long run, toward the minimum wage necessary to sustain the life of the worker. The theory was first named by Ferdinand Lassalle in the mid-nineteenth century. Karl Marx and Friedrich Engels attribute the doctrine to Lassalle (notably in Critique of the Gotha Programme (1875), Marx), crediting the idea to Thomas Malthus in his work, An Essay on the Principle of Population, and the terminology to Goethe’s “great, eternal iron laws” in Das Göttliche.

    According to Lassalle, wages cannot fall below subsistence level because without subsistence, laborers will be unable to work. However, competition among laborers for employment will drive wages down to this minimal level. This follows from Malthus’ demographic theory, according to which population increases when wages are above the “subsistence wage” and falls when wages are below subsistence. Assuming the demand for labor to be a given monotonically decreasing function of the real wage rate, the theory then predicted that, in the long-run equilibrium of the system, labor supply (i.e. population) will be equated to the numbers demanded at the subsistence wage. The justification for this was that when wages are higher, the supply of labor will increase relative to demand, creating an excess supply and thus depressing market real wages; when wages are lower, labor supply will fall, increasing market real wages. This would create a dynamic convergence towards a subsistence-wage equilibrium with constant population.

    Classical liberals (MODERN DAY NEOLIBERALS) rejected Adam Smith’s belief that the “invisible hand” would lead to general benefits and ****embraced Thomas Malthus’ view that population expansion would prevent any general benefit and David Ricardo’s view of the inevitability of class conflict.*****

    Laissez-faire was seen as the only possible economic approach, and any government intervention was seen as useless.


  • Deep South Populist

    I see a downward slope throughout most of the Clinton years and Obama’s term as well — the Obama downward slope looks like an ice cliff.

    I hope whoever plans to check in with the standard response now (it’s not Obama’s fault; Obama is dealing with fallout from the Bush economy) indicates the point at which Obama will become responsible for this economy. At the start of his second term? At the midpoint of his second term? Never? For most Obama partisans the answer will no doubt be never.

  • LauraNo

    Look on the chart where Reagan came in and then again where Bush comes in.

    • Deep South Populist

      You will notice I didn’t deny it. But let’s be fair. Clinton did not reverse the trend. Neither has Obama.

      • indy

        Actually, I think you are seeing what you want to see. Here is the data from the numbers closest to each president’s term. The only positive one is Clinton’s. I’ll leave it to you and your conscious to decide if it is fair to compare Obama’s partial term to the rest.

        Reagan January 20, 1981 to January 20, 1989

        1981-04-01 107.421
        1989-01-01 105.254

        NET CHANGE = -2.167

        Bush Sr. January 20, 1989 to January 20, 1993

        1989-04-01 103.993
        1993-01-01 103.865

        NET CHANGE = -0.128

        Clinton January 20, 1993 to January 20, 2001

        1993-04-01 104.265
        2001-01-01 107.656

        NET CHANGE = +3.391

        Bush Jr. January 20, 2001 to January 20, 2009

        2001-04-01 105.427
        2009-01-01 98.299

        NET CHANGE = -7.128

        Obama January 20, 2009 – present
        2009-04-01 98.661
        2011-01-01 94.897

        NET CHANGE = -3.764

      • ottovbvs

        DSP: Can you read charts I wonder? Clinton did reverse the trend temporarily but then it reappeared in the early years of the Bush presidency.

  • shediac

    A simple answer; WalMart! Am I the only person who remembers the original Walmart stores with the giant American flag? Remember the ‘Made In America’ signs on every rack in the Walmart store? What happened? Blame the unions for getting Americans fair wages? Blame the politicians for lying about free trade and the reasons for free trade? Who pushed for free trade? Hey what the heck, the rich and super rich are happy!

  • LauraNo

    I agree, Clinton was not much better, he supported ‘free trade’ and Obama does not look to be in any hurry to try to address all the problems we have relating to runaway banks and corps. I am very discouraged these days and I am one who believes our best days are way behind us and there is no hope in heck we will ever turn this boat around.

    • rucb_alum

      You are recalling the highlights and losing the details…Clinton supported NAFTA and MFN (most favored nation) for China but the GOP stripped out the employee parity and environmental regulation portions of the bill knowing full well that WITHOUT those protections, we would lose our manufacturing base.

      Now who’s to blame?

  • nickthap

    It’s called “neo-liberal” economic policies, and every president since Reagan has espoused it. Larry Summers and Bob Rubin are major neo-liberals, as is Greg Mankiw, Alan Greenspan, the IMF, etc. Basically, the entire “establishment” is neo-liberal in terms of economics. NAFTA was the crown-jewel of neo-liberalism. NAFTA was supposed to bring peace and prosperity to Mexico, remember? Did it work? Nope, just INCREASED illegal immigration as US agribusiness flooded Mexico with cheap corn and set the stage for the drug war there. Then all the Maquiladoras packed up and moved to China, the invisible hand guiding owners to the cheapest labor market.

  • valkayec

    Steve Pearlstein, Business Columnist for WaPo, has an editorial today that aligns with this issue. Significantly, he writes that the measurement tools used to gauge economic growth are out of date, thus no longer reflecting the actual US economy.

    “Economists also are discovering how the globalized supply chains of U.S. based-companies have led government statistical agencies to overstate the size and growth of the U.S. economy — and, along with it, the growth in labor productivity, particularly in manufacturing. The implication of this mismeasurement is that the decline in GDP during the recession was greater than originally thought and the growth since has been weaker, which perhaps helps to explain the disappointing jobs picture.

    The source of this mismeasurement is rather technical, having to do with the price estimates for imported parts and material. If the prices of these “intermediate goods” were actually lower than assumed, and the volume higher, as economists now suspect, then the economic value that was added to them by American workers would have been overstated by the official GDP statistics.

    Michael Mandel, an economist at the Progressive Policy Institute, was one of the first to sound the alarm about this statistical mismeasurement. Mandel explains that the increase in overall output and productivity has been real — it’s just that much less of it can be attributed to U.S. workers. Instead, more of it reflects the productivity gains of foreign suppliers or the increased efficiency of manufacturing supply chains — gains that more naturally flow to foreign workers and the company owners and executives who set up and manage the supply chains. That would help to explain the absence of wage gains in the United States.

    “The mismeasurement problem obscures the growing globalization of the U.S. economy,” Mandel writes. More significantly, it suggests that all that off-shoring and outsourcing has generated less benefit to American workers and the American economy than most economists and the business community have claimed.”

  • LFC

    For years the Republican strategy was to get their people fired up about “God, gays, and guns” while robbing them blind to benefit large donors. It’s really no different today except that they’re also screaming about the deficit that they mainly created.

  • Frumplestiltskin

    yeesh, so what are the answers?
    In China the gap is far bigger but it is not a problem because the pie has grown so much. 40 years ago there was no wage gap, hell 40 years ago there were no wages.
    Workers share of national income doesn’t matter if his own income is outpacing inflation. It hasn’t.
    Republicans have no solutions except to pretend the environment doesn’t matter nor the uninsured nor the poor, as long as they have their gated communities and country clubs.
    It all comes down to core values. Democrats believe that everyone has the right to education, basic, affordable health care, and shelter. Republicans only believe in the right to have their own access guaranteed provided you have the money to pay for it.
    It is the difference in values between Ayn Rand and Jesus Christ.
    In China, despite all of the income gains made the past generation, people save an enormous amount of their income because of necessity. I had to pay out of pocket the hospital costs for my 2 sons births. They have a far smaller consumer society than ours. Once they develop a social safety net then their market can mature and they will not rely on exports as much.

  • LauraNo

    LFC, they won’t stop until we’re all serfs. And their minions will STILL be blaming the ‘others’ for all their problems.

  • jg bennet

    we need a neoliberal WATERLOO…..hint hint david :)

    FRUM could rock the establishment with his classic frumian style if he spills the beans on how neoliberals hijacked both parties.

    the question is, is frum a neoliberal?

    WATERLOO could start with a history lesson…..

    Protectionism in the United States

    Free trade and protectionism are regional issues. Free trade in America is the policy of economics developed by American slave holding states and protectionism is a northern, manufacturing issue. Although not as animating an issue as slavery, differences in trade between the two regions contributed to the Civil War and remain a point of national difference even today.

    Historically, southern slave holding states, because of their low cost manual labor, had little perceived need for mechanization, and supported having the right to purchase manufactured goods from any nation. Thus they called themselves free traders.

    Northern states, on the other hand, sought to develop a manufacturing capacity, and successfully raised tariffs to allow nascent Northern manufacturers to compete with British competitors.

    Beginning with 1st U.S. Secretary of the Treasury Alexander Hamilton’s “Report on Manufactures”, in which he advocated tariffs to help protect infant industries, including bounties (subsidies) derived in part from those tariffs, the United States was the leading nation opposed to “free trade” theory.

    Throughout the 19th century, leading U.S. statesmen, including Senator Henry Clay, continued Hamilton’s themes within the Whig Party under the name “American System.”

    The opposed Southern Democratic Party contested several elections throughout the 1830s, 1840s, and 1850s in part over the issue of the tariff and protection of industry.

    However, Southern Democrats were never as strong in the US House as the more populated North. The Northern Whigs sought and got higher protective tariffs, over the bitter resistance of the South.

    One Southern state precipitated what was called the nullification crisis over the issue of tariffs, arguing that states had the right to ignore federal laws.

    Mostly over the issue of abolition and other scandals, the Whigs would ultimately collapse, leaving a void which the fledgling Republican Party, led by Abraham Lincoln, would fill.

    ***Lincoln, who called himself a “Henry Clay tariff Whig”, strongly opposed free trade.***

    He implemented a 44 percent tariff during the Civil War in part to pay for the building of the Union-Pacific Railroad, the war effort, and to protect American industry……….

  • nhthinker

    A great bunch of statisitcs on Morning Joe this morning:
    Steve Rattner reported…

    Change in Real Weekly Pay

    Less than High School ……. Down 24%
    HS, but no college………….. Down 10%
    Some college or Assoc, Deg. Down 7%
    Bachelor’s Degree and up… UP 19%
    Source: Bureau of Labor Statistics

    In 1992 only 21% had Bachelor’s degrees or higher, now it is 30%.

    Old line GM worker makes about $28/hr
    Volkswagen plant in Tennessee will pay $14.50/hr

    Unemployment rate for people without a HS degree 15%
    Unemployment rate for people with Bachelor degree 5%

    Does meritocracy work?

    • ottovbvs

      Does meritocracy work?

      A) Is this a matter of debate?

      B) Government is entirely responsible for the expansion of access to higher education.

    • valkayec

      You forgot to add:

      New line worker at GM in Detroit: $14/hr

    • fzriely

      The question is whether workers are less worthy today than they were a decade ago. That’s unlikely.

  • NRA Liberal

    The elites of both parties are pro-market fundamentalists who believe that labor unions distort wage signals and that privatization and free trade are good things.

    On the Galtian Occupation Party side of things, they lean Koch-libertarian and are opposed to taxes of any kind.

    On the Clinton/Rubin/Summers/Geithner/DLC/Third Way side of things, they believe that the best way to handle inequality is to free the market for maximum efficiency and then “redistribute wealth” afterwards via taxation.

    In other words, the “fuck the poor” libertarians constitute our nation’s “Right” and the patronizing technocrats constitute our nation’s “Left”.

    • ottovbvs

      The elites of both parties are pro-market fundamentalists

      This is undoubtedly true because with all their imperfections properly regulated capitalism, markets and free trade have proved to be the the most effective economic systems for generating wealth and raising living standards for all.

      • NRA Liberal

        “…This is undoubtedly true because with all their imperfections properly regulated capitalism, markets and free trade have proved to be the the most effective economic systems for generating wealth and raising living standards for all….”

        All well and good as far as it goes. These days, a substantial minority seems to believe that any attempt to “properly regulate” capitalism is as good as a surrender to Communist forces.

        • ottovbvs

          All well and good as far as it goes.

          All well and good? It’s the core reason why the world works as it does. And yes there are a lot of hyperbolic idiots on the right, but that’s a different issue.

        • NRA Liberal

          Is it really a different issue?

          I think those hyperbolic idiots just represent the far starboard edge of the currently acceptable discourse. The id of our modern political economy.

          There are more possibilities for capitalism.

  • Stan

    My answer to the first of DF’s question is yes. Income inequality is a practical problem because it leads to insufficient consumer demand and because it results in ever increasing inequality due to the power of the wealthy to control both of our major political parties. I also regard it as a moral problem. When we see millions of people losing their homes while wealthy individuals pay $230,000 for guard dogs, something is horribly wrong.

    As far as the second question goes, I think the government should play an active role in providing social benefits and it should pour resources into education and training. I favor paying for all this with more steeply graduated income taxes along with a value added tax to remind all of us that there are no free lunches.

  • valkayec

    If yes, what can be done about it?

    I realize the current crop of GOP candidates won’t follow my suggestions, at least not in the current TEA party dominated GOP environment. But one suggestion would be to look around the world at what other countries have done. Germany & Singapore essentially followed the same principle and now have low employment as well as up-to-date skilled workers.

    Another would be to open up financing at Credit Unions and small banks for new businesses and entrepreneurs as well as help them with the regulatory system. I believe it’s Finland that has a governmental office dedicated to helping new businesses get started, with low interest loans, managing the regulatory system and getting the paperwork done, and reducing some of the costs of start-up. While the Finland model wouldn’t work in the much larger US, some of the ideas could be adjusted to the US.

    Yet another would be to make it easier for tourists to visit the US. Since 9/11, tourism in the US has fallen dramatically because of the difficulty of getting tourist visas.

    These are just three ideas out of the many hundreds or thousands that have been put forth. And most of them cost nothing or will actually reduce costs. But as I said, the GOP candidates won’t advocate them for any number of reasons.

  • ram6968

    latest report out state U.S. wages falling…….china’s wages rising…..parity at 2015…’s called globalization and it is not a coincidence

  • iridium53

    Workers’ share of U.S, national income is collapsing.
    The collapse started with the Bush tax cuts. And, continues on.

    Since the Bush tax cuts, the share for the top 1% has gone from 7% to more than 23%.

    Government revenue has gone from just under 19% to just over 14% – and GOP wants to cut more.
    The deficit has, of course, skyrocketed.

    The correllation and facts are clear.
    Supply-side, trickle-down, Laffer economics is working for the rich. But, destroying the national economy.

    Washington spends more in Iraq, Afghanistan, Pakistan and Libya, than it does on fixing the American economy. Washington ignores the trade war that China, India and Europe are winning.
    The effete, feckless elite of Washington are, it seems, intentionally killing the American middle-class.

  • Biped

    When President Obama talks about the disparity in income, which has grown by leaps and bounds over the last two decades, there are cries of ‘Socialism!’ from the Right. It is not only globalization and the current predicament of the US economy, but also, thanks to the castration of anti-monopoly legislation, the concentration of wealth, and therefore, economic power, into fewer and fewer hands, hands which are indifferent to the welfare of the country, that is ultimately destroying the American middle class and reducing people who labor into near-peonage. With the middle class goes democracy.

  • oh_really

    The answer is we all get to go back to everyones favorite topic – healthcare – or we watch it eat up not only personal incomes, but the defense budget, education, r&d, infrastructure and anything else that has a good argument for federal funding.

    The first thing to try is to cap the tax deduction employers receive for moving compensation from wages into tax deducticble health benefits. Remove the incentive and it should allow wages to track growth again. It’s the missing piece to Obamneycare which will allow us to have an elevated level of healthcare spending – which will be a future source of innovation and growth – but not a corrosive level of health care spending which eats up more and more functions of government. A repeal of obamacare wouldn’t solve the issue and it would end up being a bad deal for your typical sams club republican unless the GOP had a replacement.

  • beowulf

    Cash out tax expenditures, Bush tax cuts and Obamacare for a negative income tax and universal Medicare system. Warren Buffett’s “import certificate” cap and trade plan would help too.

    Democrats won’t propose any of this because its hard to wax poetic from a fetal crouch. So I guess we’ll have to wait till some future Republican president does it.

  • LFC

    I see a comment quoting VW line workers making $14.50 an hour. That’s roughly $29,000 per year. This is how that stacks up compared to Health & Human Services poverty line (household size and income):

    1 10,890
    2 14,710
    3 18,530
    4 22,350
    5 26,170
    6 29,990
    7 33,810
    8 37,630

    So a family of 4 is about $6,650 above the poverty line. According to Republicans, out of that they are supposed to be able to save for retirement, pay any shared premium, co-pays, and drug costs not covered by their health insurance, save for health insurance in case they lose it, send their kids to college for a better life, and have enough funds for any unforeseen emergency. Are Republicans mathematically illiterate or do they just not care about Americans?

    • ottovbvs

      That’s roughly $29,000 per year.

      This is what Republicans call a living wage. It’s not that far belown median income of around 35-40k in several southern states which means that half the inhabitants are getting by on that.

  • Quite a chart! |

    [...] isn’t investing in workers, and it shows. Stunning charts from David Frum show the lowest recorded worker share of U.S. income ever. Odd, though. Charts of corporate profits look [...]

  • RevWilly

    Kudos to NRA Lib for pointing out that both parties feed at the same trough.

    Which is at the heart of much that is wrong with a capitalist system. No matter how much or how well it is regulated – for a time – the power brokers (read that: the wealthy) excerise the kind of muscle destined to effect the election of Gov’t officilas to serve THEIR interests over the common persons interest. This is accomplished not only because campagins are so expensive tha large amounts of money are required to run one, but also by the influence of ….. what??? A liberal media? NO! A conservative media? No again. A PROFITS driven media dependent on advertisements from profits driven comporations. Advertisers are to news networks what lobbyist are to congressional staffers.

    The game is rigged from top to bottom. That’s why, in large part, you “beleive” in trickle down economics. It’s also why, in large part, the great unwashed “middle class” identifies “the poor” as the source of most econ problems even though they weild the least amount of political (or economic) power, while the wealthy are admired, if only secretly so, even though they are the ones with the real power and influence to make things happen or not happen.

    In the word of Carl Marks “I told you this would happen.”.


  • Assorted links — Marginal Revolution

    [...] Workers’ share of U.S. national income, over [...]

  • Fremo

    “Free market rules”

    Except half of it is run by Communists and Socialists in this equation. How’s that free? Workers don’t get to ask for higher wages in China, that’s controlled by the state. When they try to get more rights, like to vote, they get run over with tanks.

    The “invisible hand” is being guided by Communists. Its not a free market.

    • ottovbvs

      Workers don’t get to ask for higher wages in China, that’s controlled by the state

      Not entirely true but there’s no doubt the state plays a dominant role in management of the Chinese economy. But that’s true in varying degrees of the entire world. China is at one end of this spectrum and we’re roughly at the other and it’s a scatter graph in between.

  • Chart ‘o the day: workers’ share of national income | ObamaPress

    [...] David Frum asks: Two questions for the Republican presidential candidates: [...]

  • tobyw

    It appears the same thing happened to labor share of Nonfarm Business Sector, Business Sector, Nonfinancial corporations. No data on Financial Corporations Sector

    Business Sector (red) got the worst of the deal.


  • tobyw

    And manufacturing employment vs manufacturing output.,CES3000000016,#

  • ragbraijoe

    What exactly are you trying to debate here? The facts couldn’t be much clearer. Trickle down economics ain’t working. The wealth is being redistributed to the top and there is no incentive for any rich person to give it away to the poor. Corporations are economic tools designed to re-distribute wealth to shareholders. That’s all. It is their mandate. It is just as clear as day. Look at the graph fer chrissakes. Taxation re-distributes wealth more directly. Taxes do not hurt employers because hiring is a tax deduction. Taxes are on PROFITS, which is the money left over AFTER INVESTMENT has already been paid for. Lowering taxes on the wealthy only helps the wealthy. Not a single job will ever be created with tax cuts. Just use common sense. Thanks.

  • fzriely

    There’s a difference between Reagan-style “growth” and Clinton-style “balanced growth”. And the difference matters.

  • tobyw

    Trickle down works fine when the economy is doing well. There must be something to trickle.

    Liquidity is good, but business bashing, profit demonization, employment and regulatory cost uncertainty, energy uncertainty are killing the food for growth.

    The food for growth (cash) is there, but the spark and timing are not.

    And BTW, redistribution sends money to political cronies, not the poor. Note the gift of GM to Obama’s union buddies at the expense of bond holders.


    This graph misses one important thing: the amount of capital per worker (measured by the monetary base) has skyrocketed over this same time period. In fact, the decline in “Labor Share” matches nicely with the increase in the amount of capital sloshing around the economy. It is no surprise that increase in capital is taking a greater share since there is so much more capital per worker. It seems to me that this chart is just misleading as a result. All these people griping are just seeing what they want to see in the numbers. Do any of you actually look to see what is behind the numbers? Or do you just want to be mad?