Over at the NYT Economix blog.
Like I said, I was struck yesterday by the juxtaposition of bank profitability and striking fast food workers, leavened throughout the day by all this criticism of the strikers for their lack of understanding of the underlying economic dynamics.
[For example, here’s an otherworldly debate on the topic from Kudlow and Co. last night.]
In the Time piece I reference the record levels of profits as a share of national income versus compensation, a symptom of the income inequality that has again asserted its presence in this as in the last few recoveries. Here’s the picture that goes with that observation:
Source: BEA (NIPA tbl 1.12)
As the figure shows, the pattern of recent business cycles is the profit share is pro-cyclical and the comp share, counter-cyclical. But here’s the kicker: note that the profit share doesn’t just recover from its cyclical lows; it surpasses them, as it has done already in this recovery, while the compensation share just keeps carving out new lows. And, for the record, compensation itself has of course become more unequally distributed, so these data present only a partial view of the growing inequality problem.
It’s a picture of an economy that has been continuously unforthcoming to those who depend on the paychecks as opposed to their portfolios.