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Comment by vannevar | Hacker News Reader

>In the popular imagination workers’ share of the economic pie has room to grow at the expense of profits. But recent research suggests that labour’s share of the value created by firms has in fact been fairly stable in most rich countries during recent decades.

It's unfortunate they didn't include any references for this claim, which seems pretty bold in the face of voluminous evidence that income inequality has increased dramatically in those same "recent decades". (See e.g., https://www.pewresearch.org/social-trends/2020/01/09/trends-..., https://ourworldindata.org/income-inequality, https://www.cbpp.org/research/poverty-and-inequality/a-guide..., etc.)

The only way I can see to conclude that labor's share of value created has remained anywhere near stable is to either lump executives in with labor, or exclude passive income from the definition of value created.

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If your income is from working a job, then it can only go up via a raise, a different job, or an additional job. But you can only reasonably work 2-3 jobs. The gains are linear and do not compound.

If the income comes from investments,we'll, there are no limits. Each increase compounds.

So yeah, the rich get richer. The system is broken, but it is working as designed.

Labor's share has been stable because it's been kept artificially low while capital profits soared. "Stable" is a misdirect here.

You’re comparing apples to oranges. Inequality is not the same as labor vs. capital. There are many rich laborers (surgeons, investment bankers, software engineers) and there are many poor capital holders (pensioners, widows, orphans).

Inequality has primarily increased because the wages of high earners has pulled away from median wages. Returns to capital have if anything declined, in contrast. And no, these high earners are not all or even majority executives. CEOs of public companies only make a very small fraction of wage earners in the top one percent. Far more common are physicians, attorneys, tech workers, financial managers, and other professionals.

Nor is it an issue that these are high earning workers are “not paying their fair share”. Almost all of their income is taxed as ordinary income at high marginal rates. Many live in high tax states like California or New Jersey and are paying well over 50% marginal rates.

Once you account for post tax-and-transfer income, inequality in the United States has not increased at all in the past 50 years.

It's a fair point that income inequality has been driven to great extent by the professional class. But the message behind the article is that everything's fine because labor's share of income has remained stable. The problem is the growing inequality, not the identity of the people taking a disproportionate share of the income pie.

Tax-and-transfer is a response to inequality, and so necessarily lags the problem it tries to address. If current policies were truly maintaining the status quo from 50 years ago, then it follows that wealth inequality would be increasing linearly, and not accelerating as it is.

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