Sunday, June 30, 2013

Labor's Declining Share



By way of:

This is from the Bureau of Labor Statistics, released June 5.  It shows real wages, real hourly compensation, for Nonfarm Business declined by 5.2% in the first quarter of 2013.  The decline real hourly compensation in manufacturing  was 8.3%.   This wipes out most of the gain in wages for the past year.  Average real wages for Nonfarm Business increased by 0.3% for the past year.

    PRODUCTIVITY AND COSTS
                      First Quarter 2013, Revised 


=======================================================================
Table A. Revised first-quarter 2013 measures: percent change from previous quarter at annual rate 
         (Q to Q) and from same quarter a year ago (Y to Y)
         
Sector          Nonfarm                           Durable    Nondurable
                Business  Business    Manufactu   Manufactu  Manufactu
              QtoQ  YtoY  QtoQ YtoY   QtoQ YtoY   QtoQ YtoY  QtoQ YtoY
-----------------------------------------------------------------------
 
Productivity    0.5  0.9   2.0  1.2    3.5  1.6    3.5  2.7   3.9  0.5
Output          2.1  2.4   3.1  2.4    5.3  2.5    6.4  3.8   4.2  1.2
Hours           1.6  1.5   1.1  1.2    1.8  0.9    2.8  1.0   0.2  0.7
Hourly 
 compensation  -3.8  2.0  -3.1  2.3   -6.9  4.5   -8.1  5.4  -4.9  2.7
Real hourly 
 compensation  -5.2  0.3  -4.6  0.6   -8.3  2.8   -9.4  3.6  -6.4  1.0
Unit labor 
 costs         -4.3  1.1  -5.0  1.1  -10.0  2.8  -11.2  2.6  -8.5  2.3
=======================================================================

Not going to have a recovery until you get money into the hands of labor, which most businesses seem to be trying to prevent.  Note the increase in productivity, year over year three times the Y over Y increase in labor costs.  Good news for the wealthy:  More stuff, but not so much more competition for buying it.

The National Memo does a nice discussion of increasing inequality over the past few years, and fires a few deserved shots at the Main Stream Media for ignoring this item.

Here's the long term story, in a couple of graphs: An index of the long term labor share of national income:

 And a graph of the ratio of the real compensation per hour to output per hour, for non-farm labor.



This is labor getting less of what it is producing, and it has to go somewhere. Maybe a little old, but still important.