Catherine Rampell over at the NYT has an important blog post about the changing split of GDP between labor and capital. Labor has seen its share of GDP fall about 5 percentage points (from about 60% to about 55%) over the last 30 years. GDP per capita is about $47,000, so 5% would be about $2,350 per person, or $9,400 per year for a family of four. Increasing the median family’s income from $50,000 per year to $60,000 per year would be a big deal.
So where’s the money going if not to labor? Corporate profits (which bounce around a lot) have been increasing. And I assume that other capital income must make up the difference (interest, rent, etc.).
It’s always illustrative to remember that while economics is a positive sum game over the long haul (we can grow the pie) it is often a zero sum game in the short run (who gets a bigger slice of the existing pie). In the past 30 years, corporations and those who both own them and run them have been making sure they get a bigger and bigger slice of the pie, no matter its size.