Saturday, January 6, 2018

Labor Share: There may be more here than meets the eye

At EPI, The decline in labor’s share of corporate income since 2000 means $535 billion less for workers by Josh Bivens.

They show this graph; I added the arrows:

Labor Share goes up and down.

Sometimes, when it goes up, we get a recession. But always, when we get a recession, Labor Share was going up.

So if Labor Share is not going up, I do not expect a recession.

I don't know what's going to happen tomorrow, but I would say Labor Share has NOT been going up lately. No recession in the cards.

// Labor Share as a recession indicator?

See also: When Labor Share Stops Going Down, Employment Growth Stops Going Up


The Arthurian said...

BLS: "The labor share is an indicator of the extent to which workers share in the economy’s output and is of interest to many."

I'm saying the labor share is an indicator of far more than how much workers "share in the economy’s output", and may be a lot more interesting that we think.

The Arthurian said...

IMF: "the labor share is a good indicator of trends in inequality."

Also this, which is related to Labor Share as a recession indicator, but doesn't go far enough: "Labor share data point to countercyclical behavior—that is, rising labor shares during the Great Recession and falling shares during the recovery".

And this explanation of the process:
"During the recession, profits were the component that contributed most often to the decline in income, which caused the labor share to increase. During the recovery, although all components of GDP increased, profits rebounded quite strongly in most economies, leading to a decline in the labor share."

The Arthurian said...

Jeroen Blokland: "a peak in labor share often coincides with recessions."