PERI
Publications
Unpacking the U.S. Labor Share (Thomas Weisskopf Festschrift Conference Paper)
James Heintz | 3/12/2013
Abstract:
James Heintz addresses the question of why the labor share of U.S. national income appears to remain remarkably constant over long periods of time, despite significant shifts in economic performance, policies, the distribution of power and institutions. As Heintz notes, the constancy of the labor share seems to contradict other trends, such as falling real wages since the early 1970s for average non-supervisory workers. 

In seeking to explain this disparity, Heintz builds on the approach to decomposing aggregate variables that Tom Weisskopf pioneered in “Marxian Crisis Theory and the Rate of Profit in the Postwar U.S. Economy.” Heintz decomposes the U.S. labor share up to 2010 according to three criteria: 1) how price movements affect the interpretation of the distribution of income between labor and capital; 2) how the trend of the labor share might change through focusing only on production and non-supervisory workers, as opposed to observing labor income as one broad category; and 3) how deindustrialization and the rise of a service economy have affected movements of the labor share.  Heintz finds that underlying the constant labor share is a pattern in which the best-paid employees have seen their incomes rise at the expense of more vulnerable workers. Heintz shows that we can understand these distributional shifts in income within the aggregate labor share in three interrelated ways:  a shift from low to high-skilled workers, from production workers to the non-production, supervisory class of employees; and from traditional manufacturing to high-end service sector workers.

 
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