JOBS VS WEALTH:

In "The Decline of the U.S. Labor Share," authors Michael Elsby of the University of Edinburgh, Bart Hobijn of the Federal Reserve Bank of San Francisco, and Aysegul Sahin of the Federal Reserve Bank of New York find that the decline of the labor share, which has been driven by a decline in the share of payroll compensation in national income over the last 25 years, is likely due to the offshoring of the labor-intensive component of the U.S. supply chain.

Comparing the mean payroll shares for the time blocks of 1948-1987 to 2010-2012, the authors find an almost 4 percentage point drop, from 57.1 to 53.3 percent, and then further posit that the majority (about 3.3 of the 3.9 percent) of the decline is related to the import exposure of U.S. businesses. Looking at other pieces of business sector income over those two time periods, they find that the decline of the labor share does not reflect an increase in corporate profit rates but rather an increase in the share of income paid for the use of structures and equipment.

The authors note that if globalization continues apace, the labor share will most likely continue to decline, especially in sectors that face the largest increases in foreign competition.

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