
Workers Are Getting a Bit More of the Economic Pie (and Shareholders Less) - Osiris30
http://www.nytimes.com/2016/05/03/upshot/workers-are-getting-a-bit-more-of-the-economic-pie-and-shareholders-less.html?referer=
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grej
The article notes that a greater percentage of national income is going to
workers now, which may very well be true according to how the accounting is
done. However, how much of that is because many large corporations are booking
a great deal of their profits outside of the US, reducing the denominator in
kind of an artificial way? I didn't see anything in the article that mentioned
the potential effects of corporations booking profits to overseas cost
centers.

The chart the NYT shows depicts worker compensation percentage of national
income. I'd be interested to see what overall worker compensation and overall
corporate profits look like in inflation-adjusted terms, separately.

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crpatino
Another possibility is to look at the compensation for upper management.
C-level officers are usually paid in stock as well as cash, but the staff
reporting directly to them are salaried employees.

If you actually look at the graph (presented in the same article) it does not
look like "the trend is reversing" at all. It rather looks like a very clear
downwards trend with a strong cyclic component. So, when the times are good,
the salaried bosses might just be handing out productivity bonuses to their
reports, and passing the bill to the shareholders.

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No1
> C-level officers are usually paid in stock as well as cash, but the staff
> reporting directly to them are salaried employees.

A great point, but note that the writer considers C-level officers to be
workers in this case. The headline might as well be _Workers Pay Probably
Keeping up with Inflation, Execs Doing Great_ , but that's not really news.

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mathattack
2 observations...

1) I recall being in an investors meeting in 2007 where the downward trend was
pushed as a good thing. (If you're a shareholder, you want to keep the $)

2) The last time it went back towards the workers was during the recession.
This tells me that it's more of a story of corporate profit growth than how
much people are able to capture. (Corporate profits have more volatility than
compensation)

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Namrog84
Maybe I am cynical or naive but if more automation and other things are
causing fewer jobs. And then the remaining employees are getting paid more but
there are fewer paid workers overall. But that'd cause a rise in compensation
of those employeed.

Shouldn't this be done differently?

Tl;dr; let's fire/automate half the workers. Pay the rest more. And worker
Compensation will skyrocket!

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jackcosgrove
The article cited total pay and compensation as a proportion of the economic
output. It does not mention median pay increasing for workers, so the
situation you're describing may very well be the case.

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No1
> After all, the pay for C.E.O.s and other highly paid people counts in those
> compensation numbers.

Most people consider workers to be rank-and-file employees, not executives.
The writer goes on to discount the effect of executive pay on the numbers, but
the methodology is far less than scientific, and doesn't really justify the
headline.

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x2398dh1
There are no error bars on this chart, and the deviation is so small as a
percentage of the total change, that we have no way of knowing if this is
signal or noise, so the article is somewhat pointless.

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cmdrfred
Isn't this phenomenon consistent this this?[0]

[0] [http://www.ibtimes.com/ceo-pay-corporate-executives-got-
rais...](http://www.ibtimes.com/ceo-pay-corporate-executives-got-
raise-2015-despite-faltering-business-performance-2359294)

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6stringmerc
> _The evidence available so far in 2016 — steady growth in wages and weak
> earnings for publicly traded companies — suggests that the reversal is
> continuing this year._

...uhh...the evidence of weak earnings while equities continue to go up,
buoyed by systemic cash-infusions by several central banks (Fed, EU, BoJ),
shows the entire system is broken. I wonder what the chart would look like
between corporate expenditures on payroll vs. stock buybacks since 2008. Just
a hunch, but I'd guess percentage wise the investor class is doing just effin'
peachy in these conditions.

Okay, I found a few numbers to kick around.

Here's one little tidbit from the article:

> _For example, average hourly earnings for nonmanagerial private sector
> workers rose 2.56 percent in 2015 in a year of very low inflation_

...and for contrast, the amount of capital deployed in buyback programs
recently:

> _S &P showed more data signaling that S&P 500 index members increased their
> buyback totals by 16.3% to $553.3 billion in 2014, versus $475.6 billion in
> 2013._

Hm.

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redwood
Doesn't change the fact that investment returns are still getting very
generous tax treatment...

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djschnei
Ah the fixed-pie fallacy... A foundational pillar for so much of today's
political rhetoric (on the right and left).

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harryh
This has nothing to do with the fixed-pie fallacy. Of course both worker's
incomes and shareholder gains can both increase by growing the pie. But at any
given point in time there absolutely is a "piece" that goes to one and a piece
that goes to the other. And it's interesting to look at how the relative sizes
of those pieces change over time and what forces can drive those changes.

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djschnei
We certainly agree. The voluntary, mutual, cooperation between employer and
employee which creates a wage vs. profit interaction IS certainly fascinating.
However, it is clear in not only the title of this submission but also the
article itself that the fixed pie fallacy is at play.

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eli_gottlieb
Awesome. It's great to see that things like the Fight For 15 movement and the
anti-collusion lawsuit in tech are having an impact.

As wages and compensation rise, it'll also be an interesting natural
experiment to measure how private R&D spending responds. Productivity growth
has been historically low these past few years, and only as short a while ago
as 2012 or 2013 private R&D as a percentage of GDP was, according to my
google-fu, quite low, while now it's higher.

If companies and the government could somewhat coordinate to see that the
working-class demand-side of the economy improves its condition while the
public and private sector spend money on R&D to improve productivity, the
economy could stand a chance of acting remotely healthy some year soon.

