Kevin Drum takes the following statistic:
As a result, wages and salaries no longer make up the smallest share of
the gross domestic product since World War II. They accounted for 46.1
percent of all economic output in the second quarter, down from a high
of 53.6 percent in 1970 but up from 45.4 percent in the spring of 2005.
And declares it to be a bad thing. He doesn't really explain, but as a frequent reader of his site I can guess his issue is that he interprets this statement as a sign of the weakening fortunes of the American wage earner.
Isn't it really dangerous to leap to such a conclusion? I can think of a number of perfectly innocuous, even positive trends that would cause such a shift:
- Aging of population means more people retirement age who take their income in form of dividends, investment returns, pensions, social security, etc., none of which are included in "wages"
- Ownership of investment assets, and thus income from these assets, has spread from just the rich to the middle class, meaning most people get more of a share of their personal income from investments and asset (e.g. house) appreciation
- Entrepreneurship rates are way up since 1970. This means many more people, particularly in the middle class, have given up working for someone else for a wage and now work for themselves for a business profit.
I know Drum wants to interpret it as a "the poor are poor because the rich take all the money" zero sum game. Anyone know what is really going on behind these numbers?