Career Calling

February 2, 2015

Capital Remains King

 

David Cay Johnston is one of my favorite writers on economics. He presents complex issues in language that is easy to follow and compelling to read. In a commentary published by Al Jazeera, Johnston notes that the recent growth in the U.S economy has not led to a growth in income reported on income taxes. In fact, average income reported dropped from $63,297 in 2012 to $61,668 in 2013. Johnson also presents a chart that tracks labor’s share of income since WWII. Since 2001, capital has been taking a bigger and bigger piece of the pie. He points to political factors, such as the outsourcing of factory jobs due to trade deals. He cites President Obama’s 2011 deal with South Korea as costing “thousands of manufacturing jobs.” He also demonstrates that all working people have been losers recently. While those making $250,000 or more a year did see a 4.8% increase in their reported income in 2013, their total income fell by 8.6% and average income by 12.8%.

What’s the moral of the story? The investor class is king. Workers are more productive than ever. Unemployment is down. Somehow, reported income is declining for all working people. As Johnston warns at the end of his commentary, “The American economy is getting bigger, but average incomes are shrinking. If that trend continues, it will eventually spell economic, social and political trouble for the country.” Johnston’s words frighten me more than ISIL. The real terror is economic.

 

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2 Comments »

  1. Thanks for the kind words, but my latest column is about income reported on tax returns and not, as you wrote, wages.

    About 73% of income is wages. My column also shows that the average wage was lower in 2013 than 2012). But it is important to not confuse wages with income.

    If you click on my byline at AlJazeera America and scroll down (clicking Load More as needed) you will come to columns detailing wages on Oct 23, 2014, and Aug. 11, 18 and 25). http://america.aljazeera.com/profiles/j/david-cay-johnston.html

    Comment by David Cay Johnston — February 2, 2015 @ 12:33 pm | Reply

    • Mr Johnston,

      Thanks for the clarification. I will revise the post.

      Clay

      Comment by claycerny — February 2, 2015 @ 2:39 pm | Reply


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