The National Income and Products Accounts (NIPA) show that the pre-tax compensation of workers dropped to 61.0% of national income during Q2. That’s the lowest since Q2-1955, and below the 65% average from the 1970s to the 1990s. Wages and salaries have been just below 50% of national income for each of the past 12 quarters; this is the first time that they’ve been that low on record, starting in 1948. They peaked at a record 59.0% during Q1-1970, and it has been all downhill since then. However, that’s partly because “supplements in compensation” (including health care) have increased from 6% of national income in the early 1960s to around 12% since the early 1990s.
The NIPA income shares analysis is pre-tax and before the government gets involved in redistributing income using tax revenues and borrowings. This explains why disposable income--which includes earned income (compensation), unearned income, and entitlements--remains around 85% of national income, as it has since the late 1940s.
The big story here is that entitlements (“government social benefits to persons”) has soared from less than 5% of national income in the early 1950s to recent record highs around 17%. The federal and state governments are currently redistributing income at an annualized rate of almost $2.4 trillion, which slightly exceeds the sum of federal income and payroll taxes. In effect, every tax dollar collected from workers by the federal government is redistributed to entitlement beneficiaries.
Today's Morning Briefing: On The (Profit) Margin. (1) Fairness and prosperity. (2) North Korea and Cuba are fair and impoverished. (3) Bill de Blasio’s tale of two cities. (4) The “5%” includes public employees. (5) The distribution of income between labor and capital. (6) Labor is losing, while capital is gaining. (7) Why are NIPA profits soaring, while S&P 500 net income is flat-lining? (8) NIPA profit margin measure at record high, while S&P 500 measure is at cyclical high. (9) Government is the great equalizer. (10) Your taxes at work supporting those who don’t. (More for subscribers.)
The NIPA income shares analysis is pre-tax and before the government gets involved in redistributing income using tax revenues and borrowings. This explains why disposable income--which includes earned income (compensation), unearned income, and entitlements--remains around 85% of national income, as it has since the late 1940s.
The big story here is that entitlements (“government social benefits to persons”) has soared from less than 5% of national income in the early 1950s to recent record highs around 17%. The federal and state governments are currently redistributing income at an annualized rate of almost $2.4 trillion, which slightly exceeds the sum of federal income and payroll taxes. In effect, every tax dollar collected from workers by the federal government is redistributed to entitlement beneficiaries.
Today's Morning Briefing: On The (Profit) Margin. (1) Fairness and prosperity. (2) North Korea and Cuba are fair and impoverished. (3) Bill de Blasio’s tale of two cities. (4) The “5%” includes public employees. (5) The distribution of income between labor and capital. (6) Labor is losing, while capital is gaining. (7) Why are NIPA profits soaring, while S&P 500 net income is flat-lining? (8) NIPA profit margin measure at record high, while S&P 500 measure is at cyclical high. (9) Government is the great equalizer. (10) Your taxes at work supporting those who don’t. (More for subscribers.)
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