America's economic pie: The slimming of workers' rewards

  • Article by: FROM THE ECONOMIST
  • Updated: November 3, 2013 - 6:22 PM

Workers’ wages have slimmed as a percentage of GDP. Here’s a plan for policymakers.

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pumiceNov. 3, 13 2:42 PM

From the article: "Paradoxical as it may sound, a good antidote to labor’s falling share of national income would be to boost ordinary workers’ share of capital." Where's the paradox? If, as noted earlier in the article, "most workers are getting a smaller morsel of a smaller slice of a slow-growing pie," then ordinary workers' share of capital needs a boost! Undervalued (and therefore poorly compensated) service sector workers comprise an ever-increasing part of the labor force--for all the reasons noted in the article. What can policymakers do? Raise the minimum wage! What better way to "spread capital’s gains more widely"?

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pumiceNov. 3, 13 3:02 PM

From the article: "A cut in corporate tax rates [will promote economic growth and thus, jobs ]." That hypothesis is appealing to those from both sides of the ideological spectrum. The fly in the ointment is the reform suggested in the sentence which follows the hypothesis: "a narrowing of the difference between tax rates on individuals’ income from capital and from labor (which is often more heavily taxed ..." The difference can be narrowed in two ways. First, policymakers could raise the tax rate or cut loopholes on income from capital. (Can you already hear the howling?) Second, policymakers could cut the tax rate on income from labor, which would mean less revenue and bigger deficits in the short term.

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ciamanNov. 3, 13 9:31 PM

This is no news at all. Since 1986 or so the workers have been losing on all fronts. Wages are down and have stayed there. And the skilled people are now retiring and just where are the skilled people going to come from? And unions are just about gone. We need welders, electric people and people whom can work with metal. We no longer need all of these college people whom cannot seem to find a full time job anymore. This country needs a mix of workers and not just intellectuals whom have trouble tieing their shoes. The way things are going, machines are going to do all and it will be a calmanity to try to get a job to live on. And that is the future and all of you really know it.

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texas_technomanNov. 4, 13 5:11 AM

Nice analysis...but it probably never happen, as the ones that make the rules (1%) don't see that they have anything to gain. Some day someone will figure out that the 99% are the ones that go to stores, buy stuff, and keep the economy running...strangle them, you strangle the economy!

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owatonnabillNov. 4, 13 6:15 AM

" What can policymakers do? Raise the minimum wage! What better way to "spread capital’s gains more widely"?" ................ One hears this tired mantra all the time. Raise the minimum wage! As if that is some kind of panacea. The unsettling truth of this, is that this is promoted so heavily by Democrat politicians, not to better the plight of the pueeeerr as is so often piously chanted, but instead to put even more money into the pockets of union workers and by implication, into the coffers of the unions themselves. Many (far too many) public employee union contracts as well as some non-public, have provisions that automatically increase the wages of union workers whenever the minimum wage for any particular state goes up. The Faithful, of course, believe totally that advocating for raising the minimum wage is done for The Pueeeerr when in fact it is done by Dem politicians merely to reward their union supporters. The drones need to wake up.

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Izzy96Nov. 4, 13 7:13 AM

Not to mention that recent job gains are predominantly part-time work...

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mgmckeNov. 4, 13 7:16 AM

owatonnabill: I'm afraid you're repeating an urban myth about unions. Please name me ONE union contract that gets automatic raises based on an increase in minimum wage. It simply does not exist. Why would it? The minimum wage gets increased so seldom, by the time it does, the union contracts have gone through several revisions. Also, the vast majority of public union workers are professional jobs (teachers, accountants, lawyers, etc.) that are no where near minimum wage so why would the two be connected?

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owatonnabillNov. 4, 13 7:52 AM

"owatonnabill: I'm afraid you're repeating an urban myth about unions. Please name me ONE union contract that gets automatic raises based on an increase in minimum wage." ............ . Owatonnabill will name two examples, not just one. In 2004, union contracts of Needletrades, Industrial, and Textile employess mandated that the union wage would be keyed to the minimum wage at that rate plus 15%. Another example: the Service Employees International Union (32BJ)in Maryland, has a contract that guarantees that workers unions remain at a certain percentage over the minimum wage. There are many other examples. Need owatonnabill go on?

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vlombardyNov. 4, 13 8:21 AM

Quite the article by the Economist--the outlet for free market capitalism. Income inequality pales in comparison to wealth (capital) inequality--the true measure of the incredible gap in America, and the Economist is correct about the need to spread wealth more broadly. A simple method of spreading capital would be to eliminate any coporate tax on any employee owned or cooperative enterprise, where the workers are the owners; sharing in the profits and not just the losses. It would be a start.

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mgmckeNov. 4, 13 8:33 AM

WOW! The “Needletrades, Industrial, and Textile” contract of 2004 AND SEIU Local 32BJ of Maryland! I guess you’re right, those pesky unions all tie their pay to minimum wage. The fact that you can google a question and find a couple obscure examples does not prove your exaggerated point. How many contracts have these two unions negotiated since 2004? While I cannot prove this, I’m confident they already make far more than the Federal minimum wage and that Fed. Minimum would have to darn near double to affect their wages. The Federal minimum wage hasn't increased since 2009. At $7.25 an hour, there are very few union jobs even within 150% of it. In addition, more than 50% of states (unfortunately not including Minnesota) have higher minimum wages.

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