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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Quantum Nucleonics's picture

I'm skeptical that this data captures the income from small business owners.

hambone's picture

I'm skeptical there is income/profit from small biz owners to be shown!?!

merehuman's picture

i was a small business owner

Caviar Emptor's picture

You mean like those rich vegetable store owners that are being put out of business? 

chet's picture

Business owners wouldn't be counted as "labor".  If they aren't counted here, the trend would be worse, not better.

chinaguy's picture

Long live the Banana Republic!

Caviar Emptor's picture

In one week we got 2 comparisons to the Great Depression:

-This week's Case Shiller confirms that Housing's peak to trough decline during the 1930s has been exceeded by our 2006 to present decline! And back then it took 19 years for real estate values to return to peak in nominal terms. 

-And now we have confirmation that the decline in real wage growth also has topped the record. 

WE're settin' records!

Newsboy's picture

Workers of the World , Unite!

You have nothing to lose, but your chains.

(Are we at the inflection point yet?)

Hephasteus's picture

The sociopath and psychopath have immunity to inflectious diseases. Paid t4 and t2 lymphocytes known as trolls.

deepsouthdoug's picture

Bloggers of the world unite!

anti Oligarchy's picture

Sometimes on ZH charts tend to come out that show a really big divergence but in reality are not much when looked at over time (single day EUR/USD for instance) 


But, this goes out over years, and the movement over that time is pretty dramatic.  I agree with the main statement, this can not lead us to anywhere good.  Either the banking class will take over even more or there will be a pretty serious revolution of one form or another.


My vote is everyone walks on their mortage at once.  Sure fire way to kill the bankster class.



FreeNewEnergy's picture

I've been doing my part for nearly two years, now. The banks are trying to run out the clock on SOLs on fraud, delaying foreclosures now that they've been found out.

I say that nascent insolvency creature overtakes them before they get to legal dispensation.

In other words, F them, as hard and as long as possible.

snowball777's picture

Any idea how long those statutory limits are for their particular sins?

+777 on the real-ass-pounding-jail experience for the banksters; I'll get my bat.

Caviar Emptor's picture

Ideal Service Jobs of the Near Future: 

-Butler, Parlor Maid, Valet, Lackey, Scullery Maid, Chauffeur, Bee Keeper

The Profit Prophet's picture

Nope....death by cell phone (according to GW).  I tend to believe it. And we were warned...

"I'll take spots on my apples...just leave me the birds and the bees" Joanie Mitchell

T.E.I.N. everyone!

American Sucker's picture

More like prostitute, pimp, coke dealer, welfare scammer, gas thief, legbreaker, and three-card monte dealer.

Bill D. Cat's picture

Sign me up for lackey . How does minion pay ?

michigan independant's picture

If any one ever thought ZH was in that bent of mind of red it just shows how much they do not know and how quick they need to turn to the Letter. These effects to the Job market in the States started before many of you were born.  ZH has done a incredible service to inform only and you are the solution to logical solutions not them. One day it will change and you better have your house in order since it is getting to the point I cannot assist you anymore even by the force of will.  

Winston Were Wolf's picture

I can catch lightning in a bottle, and I have no idea WTF you just said.

Rusty Shorts's picture

We wish your planet no ham...

Reese Bobby's picture

If I couldn't pistol hunt hogs and shove poles from their anus to snout to smoke 'em, well I don't like to think about it...

wannabe traitor's picture

1950-1960 looks to have been the best years. In other news......this is most def ubber BULLISH!!

chubbar's picture

I wasted 5 minutes of my life just to figure out that you are a fucking idiot with no idea what you are talking about and no ability to match applicable youtubes with the topic at hand. Go post somewhere else where folks don't have the time to actually consider what you are saying. you'll be a king! Thanks, ZH readers.

Use of Weapons's picture

If you've not got the point that GNH has long been high for those eras in USA of ultimate consumer ignorance, then bye. Or that, really and truly, it has been argued that the USA should somehow return to those eras [cough.. seen Republican / Christian thinktanks recently] and that it's consumers would 'work' in that model...


Then you wasted two minutes of my life.


Need sources? We can do that.

Caviar Emptor's picture

Here's IBD's take on the data: 


The past decade of wage growth has been one for the record books — but not one to celebrate.The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show.



PhD's picture

Labor income?! We dont need no stinking labor income!

Monedas's picture

Ever try to compute a welfare queen's hourly rate of compensation ! They don't even have to stand in line anymore ? The tricks and drugs they sell are off the books, too ! Monedas 2011

Reese Bobby's picture

You should not have been junked.  You make a serious point.  Now geet da fuk oft my porch or i'ze cut ya...

downwiththebanks's picture

Sort of like your derivatives casinos and expensed lap-dances, eh Banker-Gangster?

BigDuke6's picture

i'm trying to enjoy these comments and you keep posting your verbal diarrhea.

Fuck off you dumbfuck!  unless you have something insightful to say rather than your painful repetitive nonsense.

downwiththebanks's picture

I understand that real history is a mother fucker to those living in denial - especially  to overprivileged, unskilled Banker-Gangsters.

snowball777's picture

in a sluggish economy
hits the land of the free
standing unemployment lines
blame the government for hard times

we just get by however we can
we all gotta duck when the shit hits the fan

10 kids in a cadillac
stand in line
for welfare checks
let's all leach off the state!
gee, the money's..really..."great"

soup lines
free loaves of bread
5lb blocks of cheese
bags of groceries

social security
has run out on you and me
we do whatever we can
gotta duck when the shit hits the fan

VT_Republic's picture

OBAMANOMICS is trickle up poverty

Winston Were Wolf's picture

You're a random sampling of the problem.

Reese Bobby's picture

Yeah!  We can have 100 angry black women picketing your business in 3 hours if you don't pay up!

Caviar Emptor's picture

More Ideal Service Jobs of the Near Future:

-Radiation control expert, cucumber taster, jester, troubadour, juggler, acrobat, Groupon arbitrager, entre_maneur. 

Rusty Shorts's picture

 - it's gettin sick ain't it.

Vendetta's picture

prostitution is a growth industry, figuratively and literally

jpritikin's picture



One widely overlooked way to empower economically poor and working people in market economy is to universalize the right to acquire capital with the earnings of capital. This right is presently largely concentrated, as a practical matter, in less than 5 % of the population. The concentration of the right to acquire capital with the earnings of capital helps to explain how people either remain poor or end up poor no matter how hard they work or are willing to work.

Binary Economics offers a conception of economics that is foundationally distinct from the economic theories presently employed by government, private enterprise, charitable institutions, and individuals to formulate and evaluate economic policy. Because it is foundationally distinct from classical, neoclassical, Keynesian, monetarist, and socialist economics, binary economics specifically offers a distinct explanation for the persistence of poverty, unutilized capacity, and suboptimal growth. First advanced by Louis Kelso, binary economics holds that (1) labor and capital are equally fundamental or "binary" factors of production, (2) technology makes capital much more productive than labor, (3) the more broadly capital is acquired with the earnings of capital the faster the economy will grow.

Most binary economists conclude that universal, individual participation in the right to acquire capital with the earnings of capital (the binary property right) is a necessary condition for sustainable growth, distributive justice, and a true democracy. Binary economic analysis reveals a voluntary market-based strategy for producing much greater and more broadly shared abundance without redistribution. Based on objective standards of (1) reasonable, workable assumptions, (2) internal consistency, and (3) plausible descriptions, predictions and prescriptions, binary economics should be considered wherever other economic approaches to growth, sustainability, development, investment, poverty, and economic justice are considered!


NotApplicable's picture

Because private property rights are already enshrined under the idea that "Thou shall not steal?"

Anyone can acquire capital if they are allowed to keep what they earn (or produce as an entrepreneur). Taxation, and other forms of government theft (services provided at the barrel of a gun, inflation, etc...) are what prevent the poor from capital accumulation (which is nothing but one's leftover savings after funding their needs).

Absent these barriers, anyone can create and accumulate wealth assuming they have the freedom to act on opportunities to meet others needs. I don't see a need to invent a yet another system known as "Binary Economics" to fix things. To me, it seems like yet another Marxist redistribution scheme reliant on the centralized force of violence to implement.

In other words, like Keynesian rhetoric, it's another perversion of the school of economics where the question "what is going on" is replaced by "what should be going on." Social sciences are not hard sciences, and should not be treated that way. Molecules behave with predictable certainty. Humans, not so much.

jpritikin's picture

Because private property rights are already enshrined under the idea that "Thou shall not steal?"

How does binary economics violate private property rights?

Absent these barriers, anyone can create and accumulate wealth assuming they have the freedom to act on opportunities to meet others needs.

Reality check? Unskilled label is paid so poorly today that even If I labor for a lifetime, I may not earn enough to buy a house, even a cheap fraudclosed house.

To me, it seems like yet another Marxist redistribution scheme reliant on the centralized force of violence to implement.

I encourage you to actually LEARN about binary economics before you spout uninformed criticism. The way binary economics redistributes capital ownership is by changing how money enters the system. Instead of money coming in through the Fed and government spending, money is to come in via individual retirement accounts. No confiscation of existing property is necessary or desirable.

tmosley's picture

Who, EXACTLY, is laboring for their whole lifetime and is unable to afford a thousand dollars for a home in Detroit?

Here's a hint:  if you have money "coming in" from anywhere other than mines, then you have confiscation of property.  Sure, it is subtle confiscation, but the end result is that it drives up prices for everyone, and destroys purchasing power.

Don't come up with a "new" way for people to steal what isn't theirs and call it "economics".

jpritikin's picture

The point is that savings ought not be a prerequisite to accumulating productive capital. Employee stock ownership programs (ESOPs) enable employees to gain an ownership stake at the place where they work without investing prior savings. Similarly, an ownership stake can be acquired in an individual retirement account by using dividends to pay off the initial low interest loan used to acquire the shares. No past savings necessary.

downwiththebanks's picture

Nice try, but historically one acquires capital through theft.

But your version makes for much better propaganda when White Capital tries to justify itself for producing landfills.