Today’s NYT has an article on Inflation, Wages, Income and Corporate Profits.

We first started running a chart depicting the same issue way back in May 2004, and have featured it several times since.

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Selected Component Shares of National Income
click for larger graphic

Selected_component_shares_of_national_in

Graphic via St. Louis Fed

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Here is a quick excerpt:

In the first quarter of 2006, wages and salaries represented 45 percent of gross
domestic product, down from almost 50 percent in the first quarter of 2001 and a
record 53.6 percent in the first quarter of 1970, according to the Commerce
Department. Each percentage point now equals about $132 billion.

Total employee compensation — wages plus benefits — has fared a little
better. Its share was briefly lower than its current level of 56.1 percent in
the mid-1990’s and otherwise has not been so low since 1966.

Over the last year, the value of employee benefits has risen only 3.4
percent, while inflation has exceeded 4 percent, according to the Labor
Department.

In 2004, the top 1 percent of earners — a group that includes many chief
executives — received 11.2 percent of all wage income, up from 8.7 percent a
decade earlier and less than 6 percent three decades ago, according to Emmanuel
Saez and Thomas Piketty, economists who analyzed the tax data."

Here’s some of our prior discussions during the last few years:

Disposable Personal Income as a % of GDP

GDP Up, Wages Stagnant

Expansion Leaving Workers, Income Behind

The Disconnect and Economic Classes

Atypical Business Cycle Recovery

Income Lag? Blame China

Wages and Consumer Spending (Not a Pretty Picture)

Sources:
Real Wages Fail to Match a Rise in Productivity
STEVEN GREENHOUSE and DAVID LEONHARDT
NYT, August 28, 2006
http://www.nytimes.com/2006/08/28/business/28wages.html

The Seasonal Cycle and the Business Cycle
St Louis Fed
July 2006
http://research.stlouisfed.org/publications/net/20060701/net_20060720.pdf

Category: Earnings, Economy, Employment, Inflation

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MSM

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Media Appearance: Bloomberg TV (11am – noon, 8/25/06)

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