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If Workers’ Share Of National Income Were At The Post-War Average, They Would Earn An Extra $740 Billion This Year

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Image: Pat GarofaloSince 2009, 88 percent of national income growth has gone to corporate profits, while just one percent has gone to wages, adding another chapter to the decline of the middle class, whose incomes have been shrinking and wages stagnating for decades. In fact, according to data analyzed by the Financial Times, workers’ share of national income has fallen to its lowest level on record, and if it were back at the post-war average, workers would earn an additional $740 billion this year:

“We are the 99%”, the slogan of Occupy Wall Street, is a reference to the rising wealth of the top 1 per cent of US income distribution. But an equally valid slogan might be: “We get 58%”.

That figure is the share of US national income that goes to workers as wages rather than to investors as profits and interest. It has fallen to its lowest level since records began after the second world war and is part of the reason why incomes at the top – which tend to be earned from capital – have risen so much.If wages were at their postwar average share of 63 per cent, workers would earn an extra $740bn this year, about $5,000 per worker, according to FT calculations.

This decline in workers’ share of income is actually holding back the national recovery, as “workers on lower wages consume much of their income, while higher wage earners and those with capital income are more likely to save.” Instead of going to the people who are likeliest to spend it, and thus boost the economy, more income is going to corporations and rich people who are just sitting on it. Corporations are actually holding trillions of dollars in cash reserves (and clamoring for more tax breaks), money that could create millions of jobs if it were deployed in a different fashion.

This blog originally appeared in Think Progress on December 15, 2011. Reprinted with permission.

About this Author: Pat Garofalo is Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.

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Diminished Expectations

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Image: Bob RosnerIn my last blog I wrote about the huge profits that corporations made during the third quarter of 2010. $1.695 trillion, give or take a few bucks. Okay, I whined a bit about corporations hoarding this money and not giving our economy a chance to build back its consumer marketplace by hiring new employees.

Here is an interesting survey outlining the curious place where we’ve all ended up as the recession drags on and on (I know that economists are convinced that the recession is over, but with an official 9.8% unemployment rate, and an unofficial one approaching 20%, I beg to disagree with them).

HR Solutions, recently surveyed 30,000 employees, and their results put an interesting spin on where workers are at today in trying to respond to tough times. The number one employee request, according to their survey, a higher salary. Okay, that was to be expected.

But some of the other comments that were at the top of the list might surprise you.

Employees are pleased with their coworkers.
Employees like the atmosphere of their organization.
Employees are pleased with flexible work hours.

Compare this to 2006, the last time the company surveyed workers. Back then some of the top comments were, “workloads are too heavy” and “departments are understaffed.” Apparently we have accepted a new reality of the workplace. That’s its going to be leaner, meaner and we should all be grateful to even have a job.

Okay, asking for a raise did make the cut. But it’s stunning how much workers have just decided that any job is better than no job and are putting up with huge sacrifices.

I know what you’re thinking. Duh. So what is new here?

In a remarkably short period of time we’ve gone from a workplace where talent had clout to one where talent is scared to speak up.

Enjoy your profits corporate America. Because at the same time I’ve seen studies that talk about huge numbers of workers who are going to start looking for a job as soon as the economy picks up. In other words, when it comes to surveys like this one, what people say is often less interesting in what they don’t say.

About The Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

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