Attention Marxists: Labor's Share Of National Income Drops To Lowest In History

Tyler Durden's picture

Probably the most imprtant secular trend in recent employment data, one that has a far greater impact on the macroeconomic themes than Birth/Death and seasonal adjustment manipulated month to month shifts in the employment pool per either the household or establishment surveys, is the labor share of national income. In a 2004 paper from the St. Louis Fed, the authors make the following statement: "The allocation of national income between workers and the owners of capital is considered one of the more remarkably stable relationships in the  U.S. economy. As a general rule of thumb, economists often cite labor’s share of income to be about two-thirds of national income—although the exact figure is sensitive to the specific data used to calculate the ratio. Over time, this ratio has shown no clear tendency to rise or fall." It would be wonderful if this was true, and thus if the US population really had a stable distribution of income between laborers and capital owners. Alas it is dead wrong. In fact, as the latest note from David Rosenberg points out, the "labor share of national income has fallen to its lower level in modern history - down to 57.5% in the first quarter from 57.6% in the fourth quarter of last year, 57.8% a year ago, and 59.8% when the recovery began." And here is where the Marxist-Leninist party of the US should pay particular attention: "some recovery it has been - a recovery in which labor's share of the spoils has declined to unprecedented levels."

Like Rosie, Zero Hedge is not a marxist blog: quite the opposite, but like him we come to the same troubling conclusion: "extremes like this, unfortunately, never seem to lead us to a very stable place." We would go further: not only does the US already have the core elements, should one be so inclined, to provoke a (rather active) anti-fascist movement based on some interpretations of pro-corporatists policies adopted by the administration, but should another be so inclined, the country also has the groundwork in place for another neo-Marxist revolution: just take this chart, add some slogans, mix, and simmer. And who will be the natural enemy? Why only look at the great October revolution in Russia for ideas. History always rhymes.

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GoinFawr's picture

yeaaaah, the Freedom of Information Act is like sooooo last year, and clean drinking water, who the hell needs that? Read me the Patriot Act anyday, it`s like, for Patriots, you know? Me, I`m like a mushroom, I like to import my water from the Nile and simply live to be fed shit in the much so in fact I may be a little hazy on the list of accomplishments of all of Ralph`s opponents in the last 4 elections, would you refresh my memory? Actually, that`s a pretty tall order to just dump on you like that, so how about just outlining all the talent in the last election. The guy who won, he musta been one helluva statesman to compete with four decades of dedicated service to the American people, no?


delacroix's picture

those corvairs, were dangerous as hell, and cars are much lighter, and nimblenow, than they were then

Pope Clement's picture

The Corvairs were fun on twisty mountain roads a poor man's Porsche.

Yen Cross's picture

 Missed you Goin Fawr. I get junked as well. You know I respect you!  YEN CROSS!

Tortfeasor's picture

Notice how it's gotten WORSE in the last three horrible years?

FreeNewEnergy's picture

Yes, considerably. Amazing, though I believe the federal government has gone so far off the reservation, most people with brains - and money - are simply ignoring them.

Their source of power comes from the power of taxation, and they have botched that completely by allowing a wide variety of legal tax dodges in the absurd tax code. They'd have to hire two million agents to even begin to catch half the tax dodgers, cheaters and outright swindlers.

I believe they have lost their way, going instead for the DHS and that whole, stupid angle. Please, watch me while I legally rob you.

Nice system ya got there. A complete mirage.

Vendetta's picture

Agree.  I tend to use the phrase 'off the rails' to describe the federal government .. and a very steep cliff is right next to the tracks ... its just a matter of time before gravity is the only force acting on its 'agenda' instead of QE.

zen0's picture

When are people in the US going to understand that the President is not the King of a traditional Monarchy?


You can use revolution to take the Monarchy out of the US, but you can't take the Monarchical mindset out of the revolutionists.

You guys are so screwed.

theman's picture

I am aware that I am in the presence of giants here.  Many, but not all.  The irrefutable sine qua non of a stereo-typical liberal is his aversion to engage the issue, and inclination to simply call the opposition names.  Nice to see your'e out of the closet.

JW n FL's picture
by theman
on Fri, 06/03/2011 - 19:54

I am aware that I am in the presence of giants here.  Many, but not all.  The irrefutable sine qua non of a stereo-typical liberal is his aversion to engage the issue, and inclination to simply call the opposition names.  Nice to see your'e out of the closet.


I see a lot of your feelings.. but nothing to debate..

I'm your fucking liberal here!

I am liberal with automatic weapons, food stamps and as well liberal with the rope with wanna be hell fire holy roller types.


so whatchya wanna do pussy? cry some more?


you those the topic and I wont talk about how republican super wanna be conservatives love meth and lil boy hookers to Blow!

MolotovCockhead's picture

I'm more liberal than you, I'm for every country to have their own nuclear bombs. If your country don't own any nuke, you are very prone to all kinds of revolution in every color code and in the names of all kind of, jasmine..comes to mind.

theman's picture

I am aware that I am in the presence of giants here.  Many, but not all.  The irrefutable sine qua non of a stereo-typical liberal is his aversion to engage the issue, and inclination to simply call the opposition names.  Nice to see your'e out of the closet.

scaleindependent's picture

and since you mentioned it, the sine qua non of a retard is repeated multiple posts...

theman's picture

I am aware that I am in the presence of giants here.  Many, but not all.  The irrefutable sine qua non of a stereo-typical liberal is his aversion to engage the issue, and inclination to simply call the opposition names.  Nice to see you're out of the closet.

zen0's picture

When are people in the US going to understand that the President is not the King of a traditional Monarchy?


You can use revolution to take the Monarchy out of the US, but you can't take the Monarchical mindset out of the revolutionists.

You guys are so screwed.

Reese Bobby's picture

No shit Sparky.  What Country do you live in that is not "screwed."  I am shopping around...

tmosley's picture

Another dumbshit reply from ZH's resident libtroll, Red Neck Repugicunt.

Here's a clue for your dumb ass--no-one here voted for George Bush.  I certainly didn't.  Nor did I vote for McCain.

But then, you'd vote for Hitler if he had a (D) behind his name.

Flakmeister's picture

There's a flag on the field...

tmosely 15 yards, personal foul, failure to respect Godwin's for postings with less than 250 comments...

tmosley's picture

Simply mentioning Hitler does not merit an invocation of Godwin.  I am not comparing him to Hitler.  I am saying he is a slave to the R==D paradigm, and that that severely inhibits his judgement.

Prometheus418's picture

Godwin's Law is not applicable here.  It was a taunt about the stupidity of the two party system, not a comparision to genocide.

Living_Stone's picture

The only diff between now an then is Old Rough and Ready.  It ended in Civil War ...

ebworthen's picture



Elections and politicians don't matter.

The only thing that matters from here on out is life and death of individuals.

In celebration of our Kleptoligarchy, this fine rifle is available for $109:

Remember; both Stalin and Hitler killed millions with ideas that were poison to individual thinking and liberty - as have many U.S. Presidents.

Fight for choice at the locus of the individual.


NuckingFuts's picture

F'And'A Right.  We have nothing to lose but our chains.

Antarctico's picture

Whoa -- nice looking Mosin-Nagat and at a very fine price!  This reminds me I need to fill out my C&R paperwork. :D

Shell Game's picture

Excellent weapon.  Local sporting good chains will put these up for $99 on occasion, avoids the extra transfer fee.  I have four of them, even used one for a weekend at Appleseed.


Prometheus418's picture

Nah, that's ugly.  Here's my baby:

A fine, light cowboy gun, suitable accessory for hangings.

Auricle of Omaha's picture

And what do they all have in common... feeding at the trough of excessive government.

But the unions have the best interest of the workers in mind - Yeah Right!

downwiththebanks's picture

Now that you're done ripping on people who actually WORK for a living, shouldn't you be shining the shoes of a Banker-Gangster right about now?

After all, you're in their service.

Bay of Pigs's picture

Coming from the angry racist clown. 

Good luck with that attitude around here.


NotApplicable's picture

Two wrongs don't make a right, but a fight.

Just because one gang happens to align with your interests does not make them any less of a gang. What you're advocating is that the ends justify the means, which you should realize, is the very essence of the slippery-slope itself. If one evil can be justified, then they all can. It's merely a matter of perspective and scope.

History is replete with "Final Solutions" where we just have to get past one evil by invoking another. Given there is no such thing as a necessary evil, but only evil, well... your ideology is where the true problem lies.

Go ahead though, fight evil with evil and see what you end up with.

falak pema's picture

Charybdis of state whirlpool and Scylla of the Oligarchical corporatocracy...We have to steer our way between Marx as solution is as bad as Milton Friedman and Reaganomics... but Marx as critique...of capitalism is another issue...we have to invent a new politico-socio-economic paradigm...Out of the stink of the current melt down and the hubristic knee jerk of the kleptocracy clowns...who won't admit their butts are covered with fiat manure of their own creation. 

Blankman's picture

"we have to invent a new politico-socio-economic paradigm"


Do tell.  The way I see it is every time we invent something new it gets turned into a far greater force for control than the thing it replaced.  Until people don't feel the need to be led around by the stuffed suits of society we will get what we deserve.  Perhaps that is your point. 

falak pema's picture

Look at it this way, technology is time's arrow for society in this age. Political man brings no value added in terms of originality, whatever his "official" tag. Those who have created the modern world dynamics with its current excesses are the mutli-national corporations. The world now needs to move away from the 'block vs block' ideological mantra pedaled by the political world. The civil society needs to spearhead the new aspirations of people in all regions that are currently constrained by RM supply availability, population increase and all the related ills associated. Our current planetary situation needs to move out of the three pillars of the last century in terms of technology and economic engine: 

a) Cheap abundant oil, which has fashioned the GM/Exxon age. The incidental MIC complex all focussed about keeping supplies to its SOLE real supply line free to the west; ie : the Saud connection. we need to find a new paradigm in this area which will be technology led. 

b) Financialised global play based on predatory capitalism and sterile wealth destruction and concentration through transfer of privately created debt to public sector. The world needs to go back to sane monetary and financial regulatory models where financial power is constrained/regulated based on Bretton Woods type mechanisms.

c) Use of military force to resolve intercontinental and strategic problems.

Yalta showed us that using "top down" governance did not help resolve the people's problems in the ideological stand-off of the cold war age under the MAD umbrella of nuclear power stalemate. We have to move on to another political equation that is more "bottom up" NOT "top down". Of which we are getting a first glimpse thanks to the new Internet technology in ironically a backward region of the globe : the MENA region. If these aspirations which are genuine and the resonance that the Internet technology have created for them, could be understood globally, we could see the seeds of the new paradigm emerging. Our growth has to move away from material movement of "consumer goods" to immaterial creation of a "knowledge" universe more conducive to human growth as opposed to classical economic growth linked to material resources. If the area for economic dynamism were basically channeled into "knowledge" creation and the basic building blocks of human sustenance, (food, energy, land, agriculture, forestry) were shared on a partitioned basis where economics criteria were balanced with local population needs (keeping in mind that population transfers around the globe is not the parameter to optimize) then we could get regional economic and social stability. I don't know what this sharing mechanism paradigm would be. But the politicians with their age old prejudices and their psy-ops techniques are no longer capable of spear heading this. But I do know that the current market driven, labor international arbitrage one is not a satisfactory one. We cannot wait for the USA to be price/productivity competitive with China before we bring back factories to USA. That is what is currently implied by the Oligarchy running the world in its current "outsourcing" binge. This is a recipe for more wars and interminable cycles of regression. As democracy is NOT compatible with this asymmetric distribution of wealth world wide; where 1% control the lives and destines of 99% without any power given to the people. 

In conclusion the road ahead leads to more civil society involvement in technology innovation towards a new paradigm and away from the MIC statist monopolies and Corporatocracy model of comparative advantage using displaceable and disposable semi-slave labour around the world.

Sizzurp's picture

It seems to me that the chart illustrates significant decline in labor wages once we left the last vestiges of the gold standard in 71.  The smart and wealthy were able to shelter themselves for the ravages of fiat currency based inflation, however the working classes got stiffed as real wages declined.  Sound money is the essence of a free prosperous society, remove it and the middle class gets ruined. Last I checked there was only one candidate running in 2012 advocating a return to the gold standard.

swissbene's picture

chart looks most different starting early 80s.  no view on politics or data/methodology.  just looking at the ink blot.  agree on principle of money, just not sure there is a causal link to labour wages presented here.

macholatte's picture

workers had unions .... but they are evil .... EVIL I tell you!!!

It's not that unions are evil. The simple fact is that like any part of a capitalist machine, unions need to learn to compete. They have not and have little to offer an employer. Unions do not provide a pool of skilled labor, they make the employer do the training. They do not dicipline bad workers, they fight the employer who tries to fire the bad guy. The day unions learn to provide a real service to the employer is the day they will be embraced by management.

I respect the state workers and I respect their unions, but we simply can't afford to pay benefits and pensions that are out of line with economic reality.
Andrew Cuomo


We vote - if the public votes 50 percent, we vote 70 percent. So we have a bigger impact with our numbers, and the organization and the manpower we can bring to a race.
Jimmy Hoffa
FreedomGuy's picture

I love the beginning of this post, "Attention marxists:". It is brilliant to draw out the statists. It is a data point that does not mean anything in particular except what you ascribe to it. It shows a decreasing share of income ostensibly to middle class and more to upper class or richer folks. It doesn't state exactly who is what and there is no why.

You statists jump on it so predictably. The solution is what? To take more stuff and give it to yourselves? To make the rich poor? Make the poor rich with other people's stuff? Hang "banksters"? All bankers?  More regulations? More taxes? More free stuff? More powerful leaders to redistribute? Higher pay for unions? More unions? More protectionism? Less freedom? Stalin, Hitler, Mao, some theoretical socialist George Washington? Cap and trade?  Free healthcare? More house subsidies? Less democracy? Maybe direct democracy? More socialism? Revolt? Against what and for what? What are the "right" percentages of wealth for middle class and wealthy? At what dollar amount do you cross from one to the other? Exactly what does that damn chart tell us to do? 

For the sake of argument let me pose a few ideas to those who would like to reason their way through this. I will delight in being the austrian free market, Adam Smith, libertarian contrarian. I know you hard core lefties are already working up bad names for the few who think as I do. It's easier than reasoning.

Possibility 1. When you are in a recession-depression people, millions of people are laid off. Millions more take wage cuts. Millions more are underemployed. Some give up economically. It is a labor supply and demand situation. The amount and price of labor is falling rapidly. Business goes defensive and does not spend with bad projections on the horizon. The middle class share of income has to fall. It will not recover until the demand for labor increases relative to the supply. Until labor is in relatively short supply, wages, real wages cannot rise again in the free market. Government labor costs can rise because it can be forcibly extracted from the population.

Possibility 2. Government policies such as currency manipulation, interest rate manipulation, higher taxes, regulatory burdens, irresponsible lending (Freddie-Fannie), income redistribution, etc. are the foundation for most of what we suffer. In a political economy based on inflation the best way to make money is to manipulate money rather than make things. Government has misdirected wealth to certain areas like housing and it has to unwind, generally from well above mean to well below mean. Classic Austrian prediction in the misallocation of wealth/resources.

Possibility 3. Much wealth redistribution is precisely because of government. Ibidum exemplum, TARP and bailouts keeps wealthy financiers and bankers who should have gone bust...wealthy, while the middle class absorbs the debt. Wealthy farmers still get subsidies even with record high grain prices. Grain prices are higher because of ethanol subsidies. Young people with no health insurance pay for healthcare (Medicare) for relatively wealthy seniors who could afford it but prefer to spend it on condos, golf and casino's in Florida. The middle class subsidizes housing, food, medicine, etc for the poor who plan to remain so indefinitely because it ain't a totally bad lifestyle...for them. Wealth moves in many directions away from the middle class, particularly middle middle and upper middle due to the sheer mathematics and amount of money available for political purposes.

My bottom line is more government is probably not the solution. That always seems to be the way to go. The apparent strong man appears and promises to solve whatever inequities seem to exist and we surrender power to him and his minions to our own destruction.

The solution in my opinion is the opposite. Do not give up power to determine your own fate. Others do not have a better plan for your life than you do, yet we are sold that bill of goods nearly daily. The biggest myth is that we need government and giving the beast more power is actually good for us.

That chart measures something. The reasons, meanings and "solutions" are up for grabs. That's where the battle is. I stake out position on the side of liberty. When our crony-capitalist, neofascist system caves in I hope there are a few who can rise above the din to point the way to a different solution than the predictable statists. Historically speaking it is a longshot.

knowless's picture

i'm sorry to sully your post with a response, but i think you underestimate the power behind what you say. it is becoming increasingly more apparent to the masses what the situation is, and now is a pivotal time to attempt to explain the core struggle within our society. not calling a top or anything, but the nightly business report showed a graph tonight which had the u-6 unemployment numbers. as is said(especially here) always "the time draws near".

I think for all of you closeted lunatics out there, it might be time to express yourselves, realise though that in this action you open up yourself and your family as a target of the state. this option should only be expressed if you are willing to suffer the consequences of your vocal opposition. but really, will they kick in your door and arrest you just for saying the wrong thing? are we there yet? do you want to find out?

unless more people start educating the masses to your line of thought freedomguy, i'm uncertain as to where we'll be as a people.

i know i am insane, and i'm fine with that now.

FreedomGuy's picture

Not sullied at all. Liberty takes reasoning, confidence and an accurate review of history. You have to resist the temptation to take action against "that other guy" who is your neighbor who is taking action against you. Government laughs as we so easily sell each other out. All problems identified by statists have the exact same problem...freedom. Other people are not choosing to do what you want them to do...wearing seatbelts, buying healthcare, buying car insurance, saving enough for retirement, giving to the poor, subsidizing your favorite thing or we will MAKE them do it, dammit! It's good for them even though "they" are too stupid to know it.

And then we wonder how we got in such a mess with such a huge, intrusive, omnipresent government.

steve from virginia's picture

To enforce less government will require a lot more government, obviously.

'Reduced government' will require definition, this means new regulations will be written: means must be gathered to enforce these new regulations along with more courts, administrative judges, enforcement, intra-agency coordination, IT, staff and outside legal counsel: a Cabinet level Department will be set up with a Secretary of Smaller Government.

The new department will require several hundred million square feet of first-class office space in locations where the governments operate ... The smaller the actual government becomes due to the efforts of the Secretary of Smaller Government the greater resources the Secretary of Smaller Government and her Department will require.

When the government itself has shrunk to nothing, the Department of Small Government will be two or three times as large and require two or three times as much revenue and manpower as did the extinguished government.

At that blessed time, Congress will be entertaining efforts to reduce the size of government reduction. Can't wait for that!

FreedomGuy's picture

I trust you are being humorous. Actually, there is one and only one way to shrink government. You must stop asking it to do "stuff". This is why Republicans will fail to shrink government in the long run. They have no intention of eliminating a single program or asking government to do less of anything. They just want to do it more cheaply than the Democrats. It's like mowing a weed instead of pulling it.

Missiondweller's picture

"That chart matches exactly the decline of Union participation and the decrease in wealth of the middle class."


So would a graph of the US manufacturing sector as a percentage of our (U.S.) economy.

FreedomGuy's picture

So would a graph of the increase in size of the government, growth in transfer payments, devaluation of the dollar and so on. So what is the common denominator? What is the cause? Most everyone gets it wrong.

jaffi's picture



You see the government as a way to achieve your goals (a true collectivist/socialist), and then you see the lobbyists that have clout with the government.  But, your first instinct is not cooperation or free commerce, rather it is to increase your own clout with said government in order to equal the balance of those seeking to influence government.  Yet, you don't make the simplest of conclusions, that it is the government and its power that is the problem.  Even a child could see this problem....

But, why would you see the problem?  You seek government power for your own benefit, just as GS or JPM seeks government power for their own purposes, you want to be up on that pedestal and receive special privileges that are not shared by the rest of us (unless we join you club).  In the end, you and your union are no better than a Goldman Sachs or a JP Morgan, because all that you seek is to fleece the rest of us for your own gain.   Need proof, just see what happens when a non-union worker tries to get a job (just a regular guy trying to make a living for his family)?  See how far he gets before he gets beaten down from the so-called "supporters of labor".  Your unions do not support labor, you only support labor that is part of your "team".  You're hypocrites that only care about yourselves, and if somebody isn't part of your team, then you can care less if he rots in a gutter.

The fact is that unions are just as much scum as the bankers, they are all looking for a handout from government, or laws to benefit themselves.  You're all POS, plain and simple.  And, unless you belong to a public-workers union (i.e. you're net tax consumers with gun-carrying thugs to guarantee your wage), then chances are that you have a higher unemployment rate than other workers in your city (marginal productivity can be a bitch).  

F you, and your punk azz union.   Just like the bansters, you seek to use the power of government over the population for you own aims.  You have no ethics, nor any core principles, that are compatible with the cooperation of humans, law, or the market.  

You are filth... And, you have no place in a civilized society.


FreedomGuy's picture

Jaffi, damn that was a good post. You get it clearly. In fact, I will be borrowing some of what you wrote in my future communications. Nicely put...although I might have left off the last few lines. I do understand where it comes from.


jaffi's picture

I was a little wasted when I wrote it, that's why it wasn't as eloquent as I would have liked.  But, the main point that I was trying to get across is that unions seek the power of government for their own aims just as any other entity.  That is the screwed up thing about government, it has the monopoly on force and power, so it is only logical that special interests will use that power to fulfill their own aims.

As Bastiat once said, "the State is the great fiction through which everybody endeavors to live at the expense of everybody else".  Unions fit this description to a T.

Urban Redneck's picture


You are forgetting the most powerful union of all- WALL STREET, which actually significantly increases labor's share of national income (e.g. the numbers are worse than presented).

In 2008, there was the Goldman analyst, the JPM commodity trader, the Countrywide sub-prime telemarketer, the Bear HF manager, and the AIG & Lehman CDO underwriters, they were all pulling a million dollars each as members of LABOR.

Then the market forces and credit crisis set in, the US government's deficit-to-Spending ratio moved from 35.1% to 63.3% in one year, while federal revenues (tax receipts) dropped from $1.9T to $1.2T.  The guys from Countrywide, Bear, AIG, and Lehman were collecting unemployment instead big bonuses that the State could tax at 50%.

So the Union Bosses- Blankfein and Dimon send a message Congress & the White House, "Either the layoffs are put back on the line and the Union Members gets a better pay package or WE GO ON STRIKE, and there won't be any fiat feed in the trough for the pigs"

Low and behold, one year later with full banker employment and record bonuses reinstated- Treasury receipts increase from $1.2T to $1.95T in 2010.

The Banker Union math is pretty simple, 10 NYC bankers making $1M each (combined $10M), generate $5M in Fed/State/City income taxes.  If 6 of those 10 bankers lose their jobs, then government revenues drop from $5M to $2M, and even with a 100% tax rate revenues would not get back above the $5M baseline, and upon which which future government spending plans are dependent on annual increases ad infinitum.  So if Congress wants to keep spending as long as possible, it is necessary to increase the job openings and the salaries & bonuses of the bankers, the income tax rate is relatively meaningless compared to the Banker Union unemployment rate.