The labor share of income in the US is at its lowest post-war level (libertystreeteconomics.newyorkfed.org)

Article summary

The labor share of income in the US has reached its lowest post-war level, with the current share standing at an all-time low. The labor share measures the fraction of economic output paid to workers as wages and salaries. The decline in labor share has been a trend since the early 2000s, with a sharp drop during the global financial crisis and another decline after the COVID pandemic. The article analyzes the dynamics of the labor share across different recession-expansion periods to understand the recent decline.

Main themes

• Labor share of income
• US economy
• Income inequality
• Taxation
• Wealth distribution
• Economic trends

What commenters say

• The wealthy use tax loopholes and accounting practices to minimize their taxable income, contributing to the decline in labor share.
• The current tax system favors the wealthy, allowing them to accumulate more wealth and power.
• The labor share of income is not the only measure of economic health, and other factors such as productivity and economic growth should be considered.
• The decline in labor share is a result of structural changes in the economy, including the rise of automation and globalization.
• Taxing capital gains as ordinary income could help reduce income inequality and increase revenue.
• The wealthy often use charitable foundations and other mechanisms to avoid paying taxes, which perpetuates income inequality.
• The distinction between labor income and capital gains is arbitrary and should be reevaluated to ensure a more equitable tax system.
• The focus on labor share of income overlooks the fact that many people, including small business owners and landlords, earn income from sources other than labor.