People are misreading the conclusion - the Covid related drop is normal and matches previous episodes, but the massive overall drop since 2000 is not.
The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
"The past three economic expansions have largely benefitted the top 10 percent. In each, the top decile received between 47 percent and 59 percent of all income growth in the expansion."
New factories use very few people, part of the reason why it's difficult for many countries to industrialize like South Korea or China did (climbing manufacturing ladder).
Employee compensation comes from capital. And employees are working at companies that provide robots, etc.
There's a return on capital than is not spent on employees. That reflects how much capital is growing and how much can be spent on employees in the future.
Every discussion about the 'top 10%' seems to make the underlying assumption that the set of people who fall under that category are consistent. While there are certainly individuals who enter the top 10% (or top 1%) and stay there; there are large numbers of people who move in and out of those categories.
For me personally, I am in the top 10%; but a few decades ago, I was not.
Aren't most of the tech workers here part of that 10% and I'd assume they own houses in some of the most expensive areas, so they are technically part of the capital class?
Increases in labor productivity is a curious thing to think about. Do I deserve more wages for using AutoCad instead of drafting paper?
- The amount I'm working hasn't increased. Still an 8 hour day.
- My job honestly is easier than it used to be; certainly less menial.
- Strictly speaking, the education requirement is actually lower. It's easier and a lower bar to learn to become a decent designer in AutoCad than to learn to effectively use old drafting tools (even though the formal four year engineering degree still takes four years).
But it's also true that in spite of this, my output is higher. Should I capture the increased output or should the innovators of the tools? What about the firms that invest in procuring these tools and production technology? Should the customers capture the increased output through lower prices? Or should the innovators, firms, and customers all get less, and instead my wages should get bigger?
Salaries aren't about what someone "deserves" or "should earn".
Those in control will try to capture as much of the return as possible. How much value the worker captures is based on their relative power (ability to move to a higher paying employer, scarcity of skillset, laws such as minimum wage, etc).
> Or should the innovators, firms, and customers all get less, and instead my wages should get bigger?
In almost all of the cases the "innovators" are themselves workers whose share of the outcome has been dropping. And the "customers" have never gotten a piece of the profits; we are already past the point where reduced prices would have happened (competition) in this system.
And I think that by "firms" you really mean some combination of executives and investors/shareholders. That is where the gains have been centralized. Do you really want to argue that management and investors deserve to have more of the gains? What have they done that makes them so much more valuable than similar groups in bygone days?
Productivity is just aggregate output of the economy divided by the number of people-hours worked. You can argue about if that's a useful thing to measure or if the measurements themselves are accurate or if you should capture more of the output, but at root it's very simplistic. If you can use AutoCAD to generate more drawings than using paper which you (or your firm) sells for the same price per drawing, then your productivity did go up. Is that meaningful? Less certain.
In practice what happens is that on average the tool-user's wages go up slightly but most of the jobs in the field are eliminated, and the resulting large profit mostly goes to managers and financiers.
Thats a good list of questions here’s another good thought provoking line of thinking:
As someone trading labour for a wage should I adjust my productivity to match the tools I’m using? That is to say if I’m using CAD should I bother using the tool to raise my productivity? Or should I just match my old hand drafting productivity rates? Should I attempt to raise my productivity rates with these new tools to meet or exceed the best rates from my coworkers?
What can we do to align my interests with those of my employer?
2% is average. 1-1.5% is considered a slump, while anything over 2.5% is considered a boom. for instance, the post-ww2 boom (1947-1972) averaged 2.9%. at that rate of growth, a country's total output per worker doubles in roughly ~25 years.
The chart you're showing, absolutely reflects the reality of some of the most productive segments of our economy.
Ford now makes more cars, with fewer people. Sears used to have people who took photos, laid out catalogs, opened envelopes (with checks in them).... Amazon has none of that. We replaced switch board operators, with mechanical, then digital switching. More calls routed, fewer people required. go back 45 years and "draftsmen" was a job - replaced by auto cad.
All these industries have seen massive productivity.
Are the people flipping burgers more productive? Plumbers? Welders? Teachers? Nurses? -- to some extent yes, because of technology but not to the same extent as the previous businesses. Anything that qualifies as "service economy" work has not seen the same gains as Ford (see: https://www.aei.org/carpe-diem/phenomenal-gains-in-manufactu... )
> The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
My understanding is that "fixed" costs like rent and groceries have gone up and taken more of people's budgets, while wages failed to catch up with this inflation.
If that's the case, it's markedly different from "situation on the ground is unchanged". I don't know how the overall pie is doing, but it has not grown enough to compensate for the labor share drops shown in the article. The slice on my plate is certainly lighter.
I'm going to go on a limb and say half of the US is not living in abject poverty? Nor can I get behind the idea that quality of life for folks is on the down trend.
I own a Medicaid home care agency in 13 states. We serve low income families and our caregivers, who earn $12-18hr which is higher than minimum wage, absolutely struggle. We have created food banks and housing assistance because even working people are a few sick days or one car repair away from homelessness.
I would encourage you to go work with average Americans in average towns. The facts on the ground are stark and eroding.
I would fully get behind us paying service providers far more than we do. To wit, it baffles me when people are upset about how much we allocate to pay for services that go to older people, but then we don't do any effort to make sure the services are provided by younger people. Indeed, we seem to go out of our way to make sure the people providing these services are, themselves, low income. It is baffling.
But even this feels like it is overstating things. You say folks are one car repair away from being homeless. And there is a lot of polling that shows people would struggle to pay for repairs. But full on homelessness? I can only assume that you are describing towns/cities that offer no transport assistance at all, that lands people into being so dependent on a car. I believe it, but I struggle to think this is literally half the nation.
Median income in the US is much higher than $12-18/hr, it is about $30/hr. 25th percentile make $20/hr. 10th percentile make $15.58. https://www.bls.gov/news.release/wkyeng.htm
So, the people you are mentioning making 12-18/hr, are literally below 1 in 4, to less than 1 in 10. These are not “average middle class Americans” except maybe in that higher end. These are low wage earners and are far below “average”.
I mean absolutely nothing normative by this statement, nothing about whether this is good or bad or what we should do policy, socially, whatever. But saying someone making below the 10th percentile is average is like saying someone making $75/hr is average.
Someone could interpret that as a lack of capitalism rather than the opposite.
That is, Henry Ford changed the world because he deployed capital to make workers so productive that they could afford to buy the cars they make.
A person paid to do child care in an organization with overhead, who has to pay taxes, etc. is not productive enough to put their own children in child care. So child care fails to revolutionize the world the way the car did.
> A person paid to do child care in an organization with overhead, who has to pay taxes, etc. is not productive enough
They are highly productive but the market doesn't value them. It values the backup forward on a basketball team - an almost completely non-productive job - more than a doctor. It values the owner of a company at $1 trillion, which is obviously absurd.
It's not "absurd"... you're confusing moral value with economic scale.
A $1T founder is rewarded for building a massive system that employs hundreds of thousands of people, moved technological progress forward dramatically, and has positively affected the lives millions.
A doctor provides life-saving care, but they are physically limited to helping one person at a time. A backup NBA forward might not save lives, but their work is broadcast and monetized across millions of screens at once.
Arguing that entertainment is "non-productive" ignores human nature. People gladly pay to be entertained. If sports have no value, do you feel the same way about books, art, and movies?
To get to the Baumol effect, the movie actor can perform once and be seen by millions whereas the theater actor has to perform at least once a night in front of one roomful of people. So the former can get paid more, a lot more.
Probably the highest paid athletes in the world are european soccer players and the thing there is that these salaries can be justified in terms of the value top players bring in a game where being relegated can bring the money train for a team to a halt. You don't see working-class soccer fans complaining about this (they feel the value!) but the owners and many representatives of capital get fuming mad about it.
(Funny, growing up in youth soccer in the US taught me to think of the game as an exercise in Brownian motion where there are too many people on the field who aren't held accountable. It wasn't until I had an argument with a recommender system that couldn't accept that I hated soccer that changed my mind and turned me into one of those sports fans who rolls out of bed Saturday mornings to watch the Premier League that I realized how high the stakes are in the European game.)
Some goes to the capital class, some goes to workers. The Marxist eschatology is that there are pressures that cause the fraction that goes to capital increases over time and breaks the system.
Look at the good deal that the UAW has gotten for auto workers in the system, both US car makers and the union are pretty happy right to keep this system in place and shrink in the face of technological change like electrification not to mention abandoning small cars for large cars that are profitable for now.
(Funny how I often I see "good old boys" driving Asian compacts because they can afford Asian compacts, and I see office workers driving big-ass trucks)
>I own a Medicaid home care agency in 13 states. We serve low income families and our caregivers
There's an extreme selection bias there. If you run an agency that works with low income families you're not going to see a representative sample of the overall population.
Maybe. Unfortunately, what digitaltrees wrote here is ambiguous. It could also be read as this:
Our caregivers serve low income families. Those caregivers, who are our employees, earn $12-18/hr which is above minimum wage. Our employees absolutely struggle. Our employees are the ones using food banks and housing assistance because many are one car repair away from homelessness.
I think the latter interpretation is correct. As in digitaltrees runs a business that does not pay its employees a living wage, who then have to rely on food banks and housing assistance.
I think “abject poverty” is probably overstating the case a bit. I do think quality of life is trending downward given the fact that housing, food, gas, medical care costs are all increasing while wages are stagnant or worse.
>I do think quality of life is trending downward given the fact that housing, food, gas, medical care costs are all increasing while wages are stagnant or worse.
That chart doesn't make the case you think it does. Real median household income rising can be explained by things like more dual earner households (more women working since the 70s), more hours worked, etc. The household income can rise while the wages can theoretically remain flat or even fall.
The more relevant statistic is that median real wages have only grown by about 29% across 40+ years (~0.6% per year)
Since 2000, medical care costs have risen by 121.3%, hospital services by 275%, college tuition and fees by 196%, compared to consumer goods by 86.1%. Things like TVs and electronics went way down in costs while the essentials have absolutely skyrocketed. The cheap stuff drags the average down.
You need a lot more than a single graph to argue against the quality of life going down for Americans.
If you have negative net worth and the bank's money, not yours, is buying your food and housing, you are in abject poverty, just that the system is propping up your survival for a while.
A lot of the US looks like they're doing great but fits into the category above.
Non-poverty would look like:
* You make enough money to pay for your own food, housing, and transportation in full, with enough buffer for emergencies, without needing to borrow a cent
* You make enough money to be on trajectory to save up to pay for your own food, housing, transportation, and medical expenses in retirement when you are physically unable to serve the workforce
> You make enough money to pay for your own food, housing, and transportation in full, with enough buffer for emergencies, without needing to borrow a cent
So you're saying I'm in poverty because I couldn't buy my house and my car outright?
> and medical expenses in retirement
You're saying I'm in poverty because I understand and intend to use Medicare?
Medicare is a different thing, the government should be providing medical care for everyone to begin with, regardless of what they make.
My definition is if you need to borrow money to put a roof over your head, at the minimum renting, you're in poverty. There are huge chunks of the US population borrowing money to pay for rent.
If your locality doesn't provide adequate public transit, then a car is a necessity, and the onus is now on the locality's economy to make sure everyone can access that; if your locality doesn't pay high enough to afford that car without borrowing money, then yes, you're in poverty. Alternatively, the locality can choose to provide adequate, safe public transit, and the bar of poverty would change.
Most of the US doesn't think this way because they're delusional and have been conditioned to feed the financial system and pay for things with money they don't have.
Yes, but German society is structured to require much less energy, just as Dutch society is structured to use much less land.
If you put Germans whose lives function in a US-style, even just getting to work will be a huge drag.
Misery depends on the structure of society. Here in Sweden I can walk to work. This means that I'm spending zero money on travel to work, and that my travel to work contributes $0 to Swedish GDP. But this is actually better than if Swedish GDP were higher and I was traveling by car.
This is one way in which GDP can be extremely misleading.
This doesn't actually seem to be true based on a quick googling, i.e. Germany has somewhat higher median income.
But in addition to the raw numbers, you have to keep in mind that they don't account for cost of living and that different countries account for various services differently, especially health care.
Totally understand that; but it counters the assertion of “abject poverty”. Perhaps relative poverty is a better descriptor but abject poverty is someone living in cardboard tents by the riverbank. Regular poor is living in section eight housing or subsidized housing. I don’t think we have 50% of Mississippians living in abject poverty.
As a gulf state resident, a whole lot of us live in shitty old shotgun houses that have been patched up hundreds of times just waiting for the next hurricane to wipe us out finally.
I would assume this doesn't account for Germans having different healthcare costs which will aboslutely wreck the average American household with how fucked our system has become.
Okay and what exactly do you get for that income? What are the material outcomes for having a "higher" income than Germany? Because I know very few people that would openly choose to live in Mississippi versus Germany.
The GP claimed that 50% of the US lives in abject poverty. Mississippi our poorest state compares with Germany in terms of median income and Mississippi itself does not suffer from 50% rate of abject poverty. So by extension the US as a whole doesn’t suffer from a 50% rate of abject poverty (begging, trinket selling, selling off relatives, shitting in public, etc.) rates of abject poverty. That’s stuff you’d see in the Great Depression or Weimar Germany level stuff.
The homeless number under estimates people with unstable housing that aren’t on the streets.
I assure you that when your basic housing and nutrition are uncertain and missing even a few days of income will result in cascading effects of hunger and homelessness, the underlying stress is overwhelming.
It doesn’t have to be this way, we don’t let bullies steal all the toys on the playground and destroy the very ecosystem that they want to have fun in, why are we letting capital accumulate in the hands of the most effective capitalists at the risk of destroying the very markets that let them succeed.
I say that as a capitalist, if we lose the system because we allow unchecked Monopoly and wealth concentration, we won’t get it back.
I agree with all those things, but if we start making up numbers and definitions we're at risk of undoing actual progress.
Maybe it feels good to say "actually everyone is a victim of capitalism", but it muddies real necessary work when it comes to determining whether to prioritize how resources need to be allocated between a disabled person living on the streets vs a graduate student who is currently just a little underwater on their credit card payments.
The BLS and Federal Reserve both have data showing that the median American household has >$1,000 left over every month after all ordinary expenses, including housing, healthcare, and iPhones.
Any definition of "abject poverty" that includes a comfortable lifestyle and $12-15k excess income every year is not a serious definition.
"should" is a pretty woolly concept. "should" we have to work at all? UBI proponents don't think so, and that apparently that has 45% support. What's hopefully obvious is that not being able to afford a 2 bedroom apartment at median wage is a far cry from "abject poverty".
I'm asking you the question because a statement like 50% of [population] is making a claim to some notion of what they expect society to look like
you introduced the benchmark "not being able to afford a 2 bedroom apartment at median wage", though I would expect a modern day society that makes any claim to be wealthy to be able to have above 50% of it's population to be able to support something like that as that would indicate they can support a small family
You're saying that's not a good benchmark, so I'm trying to understand:
1) Do you have a different benchmark?
2) Is your key complaint that being unable to own a 2 bedroom house doesn't mean that individual or family is in "abject poverty"? In which case fair, though I would ask what does mean abject poverty for you?
It seems like you're saying 2, but I want to be sure
>In which case fair, though I would ask what does mean abject poverty for you?
The exact number is heavily contested[1], so I know better than to provide my own. That said, the official poverty lines are a pretty good place to start, and it's pretty safe to say is that whatever the line for "abject poverty" actually is, "2 bedroom apartment on 1 person income" is pretty far away from that. That claim doesn't require me to provide a specific poverty line.
In addition to that being obviously different from the line to “abject poverty”, it’s not at all obvious that a single median income should be able to support a 4-person family in a 2BR apartment or else the system is completely broken…
Does being poor cause mental health issues, or are mental heath issues a cause of poverty... The answer here clearly better access (read free) to mental heath care, and it wont have the impact one would think (see the UK data).
> Look at other stats like rising infant mortality
The thing is we changed how we collect this data, to something that would be considered bad: https://www.washingtonpost.com/health/2024/03/13/maternal-mo... - There are tons of criticism on how we collect this data, they are valid, if you dont like this source, find another its a mess of our own creation.
> dropping IQ etc.
The largest root cause is that people spend too much time on their cell phone dumbing themselves down. Think about that one... no one feels the need to elevate themselves, they are happy to spend time on what amounts to leisure. Would you have sympathy for the person who gets fired cause they chose to play 18 holes of golf 5 days a week rather than do their job?
"Listen folks, it's no big deal if you can't afford rent or to purchase a house. Ignore my vacation homes in Aspen, Jackson Hole and Nantucket. Just think about how much better you have it than the people in Haiti and get back to work!"
Because we as a society have drastically changed how we use housing: https://www.census.gov/library/stories/2023/06/more-than-a-q... -- Multi generational housing was a thing. Having roommates was a thing... the premise of "golden girls" would be lost to a modern audience, because cohabitation is dead. The premise of "bosom buddies" would get canceled for its insensitivity, but no one would understand because boarding houses are all but gone.
Building every one in the world an American style house, would cripple the globe. Concrete, Sand, Copper, Wood are going to become massive problems long before we get close to getting the job done.
> Ignore my vacation homes in Aspen, Jackson Hole and Nantucket.
You think that vacation homes are causing the housing crisis? Are eroding wages elsewhere? The industry of these locations is TOURISM, and a fair bit of it is international. (Not Nantucket).
It's not like whaling is going to make a comeback to make Nantucket a viable place to live again.
> Just think about how much better you have it than the people in Haiti and get back to work!"
Plenty of Americans look at musk and say "lets eat the rich" ... the problem is that the rest of the world has those same hungry eyes for us.
It absolutely is relevant to the discussion. Many Americans are ungrateful and envious of the Americans wealthier than them, in spite of the fact that their own living standards are still far far better than the majority of humans on the planet. And some of those hypocritically think that the wealth of richer Americans belong to them, but would never consider giving their own wealth to people across the globe who are poorer than them.
If you’re only complaint is the word “abject”, I encourage you to try to live on anywhere from $7 to $15 an hour, in a part-time job that doesn’t guarantee week to week how many hours you’ll get.
My room mates all lived on slightly above minimum wage with part time hours. They were not in abject poverty. They were just plain poor. They still had cars, phones, video games, food, water, shelter. They each had an ACA plan heavily subsidized and probably were eligible for other welfare but didn’t use it as far as I am aware.
This is quickly going to devolve into 'nobody suffers unless their suffering as at least as bad as the worst suffering that exists', so let's just go ahead and get that out of the way and move on to something less pointless.
But you could. There is no law of the universe that is going to stop you. Words are something randomly made up by humans.
> it's just plain wrong.
Again, words are completely made up, so it can't really be wrong in the traditional mathematical sense. It could be misinterpreted, perhaps. Of course that is dependent on how you've chosen to randomly make up "wrong".
Have you looked up the definition of abject poverty? It is "the most severe and hopeless form of human deprivation". It's the subject of the conversation, how is that pointless?
While you are able to look up someone's definition of abject poverty, the only definition that is relevant in this context is the one held by the author of the earlier comment. It is unlikely you can look up his definition (before he replies to those who have asked for the definition in force).
> the only definition that is relevant in this context is the one held by the author of the earlier comment.
This is absolute nonsense. We use common language to refer to common things in understandable ways in order to communicate with each other. You don't get to just handwave baldly incorrect statements as "well maybe he just has a different personal definition" without basically rendering literally all conversation moot and pointless.
"Yeah, I know he said 2+2 is 5, but you don't know he defines 5" is just as patently silly.
> We use common language to refer to common things in understandable ways in order to communicate with each other.
Common doesn't mean ever-present. In practice, it is impossible for everyone to converge on a shared understanding for all terms. There are provably many people in the world who have never even heard the term "abject poverty" before. They cannot possibly understand what the term means to you. Fundamentally, "abject poverty" can only mean in that comment what the author believes it means. That may overlap with your understanding, but it also may not. We can also prove that he is not a mind reader and thus cannot tune it to your understanding. He is limited to his understanding and his understanding alone.
A good faith actor who believes there may be a discrepancy in understanding will seek clarification. That is what a discussion forum is all about. If one does not want to participate in discussion, why be here?
dozerly. "We have one of the worlds most prosperous economies, and half of the US is living in abject poverty while quality of life for everyone is decreasing." Hacker News, 30 Jun. 2026, https://news.ycombinator.com/item?id=48734916
>The linked view of the chart is distributed by income percentile, the title is "Wealth by income percentile"
That's still measuring wealth, not income. The correct statement to draw from the chart is that top 1% by income have nearly as much wealth as the bottom 80%.
It's amazing how few people are willing to admit there is a problem. Spend 45 minutes driving around the state I live in talking to random people and it's painfuly obvious this is reality that some. I suppose it's mostly epstein sympathizers who are pushing the narrative that everything is perfect and nothing needs to be done.
>the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us
I don't see where the article made that claim. Are you making it yourself and can you support it? That sounds like something that would happen when technology improves. What the article does do, is pose a question that it never answers: "When the labor share falls, it means that productivity, prices, or both [which?] are growing faster than wages."
Unit cost on labor has increased at a more or less steady pace this whole time. Ergo, it's not so much that labor is decreasing as other things are increasing faster.
It's hard to argue that technology is increasing labor productivity an order of magnitude faster than it was in the 50s. It's more likely something else in the dataset (returns on capital/rent) is exploding in value.
>the amount of labor being generated per person has not really changed
im not really understanding what you mean. i dont get how labor is generated, in particular. do you mean to say the amount of total hours dedicated to labor per person or something else?
he's referring to labor productivity, e.g., the economic value produced per unit of labor input. it also _has_ changed significantly, as seen here: https://fred.stlouisfed.org/series/OPHNFB
I don't know which people you're referring to, but the conclusion is pretty clear: the _share_ of the total pie captured by labor is shrinking. Productivity is increasing, but capital is capturing all, or almost all, the benefits of that increased productivity and economic growth.
AI is going to further exacerbate this inequality.
I have a similar PoV. I think rent seeking without sufficient checks is one of the biggest problems in our economy.
But the underlying problem that people aren't paid enough is still true. Outside a few fields, most people are underpaid. It's even more stark when measured against productivity increases during the same time periods. That wealth went somewhere. It wasn't to most people.
People have a tendency to get upset when they realize these kinds of things.
From outside it doesn't look like not being paid enough. It looks like affordability problem. Prices in general are too high.
Rents in general are part of this. Both for housing and commercial property. Somehow getting profit from both rent and appreciation is the goal of the system.
Well that is what population voted for and choose not to overthrow system for so maybe they deserve it.
Underlying rent are other things going up - property taxes, input costs like labor and materials, and insurance.
While we must be mindful of greed and abuse, we need to include all underlying costs before just assuming people are cranking up rents. I'm not a landlord but I own property and the costs are gotten vicious lately. Labor is expensive, materials are insane, energy costs, and now insurance are suffocating. And in states with high property taxes, watch out.
Energy is one variable. But have things gotten less efficient as things keep going up in prices? Is more labour needed to produce the same? There is stuff like regulation forcing more expensive things. But in general if there was efficiency gains things should keep the same price or drop. Somehow this isn't really happening very well.
But my thesis really is that these things are not underlying the rents. But rents are actually underlying these costs. And well in general the rent seeking economic process build on ever growing valuations of everything.
Restaurant operations is one of the places where it's most clear the rent is the biggest problem.
You can say restaurant workers need to be paid more, and ok sure, but where is that money coming from? You pay labor, food suppliers, rent, utilities, taxes, and... where exactly is the money to pay workers more coming from?
With the number of empty storefronts in my city (not to mention restaurant closures) it's clear owners aren't making money hand over fist or there would be many more restaurants.
Restaurant workers in my experience are more likely to go to more restaurants and they can't because... their rent is too high and the price of food at restaurants is too high.
The common denominator with all of it is money being sucked away from people doing work and people hiring work by... rent seekers.
The "labor share of income" is exactly this. How much money is getting sucked out of the rest of the economy to prop up the do-nothing class. Retired people whose retirement investment was selling a house for much more labor than they bought it for and real estate owners doing as little as they can to maximize income they aren't earning.
If you build plenty of houses, they become affordable. The latest Affordable Housing is mostly gov-enabled scams, at least in San Diego. They are being made for greater costs than the luxury housing since the funding is guaranteed. Then the same developers are incentivized to keep all rates high by building less.
I don't want affordable housing mandated, I want the opposite. Force builders to build 1500 sq ft three bedroom apartments. Flood the market at the top end with SPACE and then tax vacancies of these spaces aggressively.
This sets a price cap, makes these high density spaces affordable for people who want to live their whole lives there and not just their single 20's, brings diversity into communities and drops the floor out of the prices on these single occupancy closets going for $2000 per month.
Just tax corporate owned vacancy. In a slump there will be apartment buildings that are mostly empty because they refuse to lower the rent as lowering rent triggers property re-valuation.
Office buildings sit mostly empty for the same reason.
Tax the owners to punish the bad bets and eternal growth expectations of banks to force them to use the space to the benefit of the community or be forced to sell when they run out of money. Use zoning laws to prevent the destruction of units to avoid taxes.
repeated efforts to develop "dwelling units" on a large scale have collapsed in corruption. There are financial players who are very aware that there are vast amounts of monthly monies at play. This is not unique to the USA in fact it is a repeated theme in the capital economies.
The US Federal Housing and Urban Development Department was intimately involved in the Savings and Loan collapse of the late 1980s. It was punted around and repeated in the 1990s, but the stock market gains of the late 1990s diluted the news in public. That phase culminated with a dot-com bubble collapse and ultimately, the 2007 dollar credit crisis. Leveraged purchases of real estate were part of that financial soup. Many of the players from that time were "boomers" and their seniors, so living memory of those circumstances are now fading. There are many, many non-fiction books about these topics.
Since 2000 the biggest economic change is software. While most workers doing physical jobs have only made themselves slightly more efficient (or maybe mass immigration has maybe even reduced efficiency in some sectors), some workers (tech workers) have made themselves hundreds or thousands of times more efficient and captured the gains as equity (either in their own startup, their job, etc...). The positive is that growth overall has still lifted living the average living standard.
Benn Jordan just released a new video proposing that we are not in “late stage capitalism” and instead we are currently an offshoot of capitalism called “leverageism”.
In the video he describes how when people like Elon Musk get to the level of wealth that they are at, it becomes far more beneficial for them to take from (or stunt) the spending power of lower classes than it is to add to their own net worth dollar figure - simply put, the former moves the needle far more in their favor than the latter.
Definitely explained the idea of our slice remaining the same while the overall pie around us is getting larger.
"Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. <later> ... and they provide little evidence that it will evolve differently from past episodes."
This conclusion seems to be against "this time is different" arguments. Should we be generally encouraged by similarity to past declines pre-2000 or bearish and think that there is more drop to come like the 2000-2007 and 2007-2019 periods they graph out?
I guess there is no way to predict other than check back in after time passes.
The submitted title is a bit sensationalist given the article’s conclusion:
> Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. First, the labor share’s trajectory post-COVID broadly follows the cyclical patterns observed in earlier recessions, with a decline during the recovery phase that mirrors historical dynamics. Second, the decline in the labor share since COVID is driven primarily by within-industry changes rather than shifts in economic activity across sectors. Taken together, these results suggest that the post-COVID decline follows the same cyclical patterns as earlier recessions and is driven by the same within-industry forces, and they provide little evidence that it will evolve differently from past episodes.
What I find more interesting is the sharp drop around the early 2000s
Capital be praised that capital owners are back on top.
May the low-waged ever be trodden upon and forever know their true place.
Those that died or became disabled during covid are mewling degenerates.
Their cries of 'illness', 'poverty', and 'homelessness' are precisely as useless as the wailing and lamentation of women in their menses, a farcical thing to be dismissed and ignored.
The origin of the word is a bit darker than its meaning, unfortunately. It comes from the Greek word for Uterus. You can kinda fill in the blanks from there as to how it came to its modern meaning.
Nah, that's knee-jerk. Don't have a particular horse in this race, just explaining why some people might react this way to the word if they're aware of the history behind it. We as a society can determine whether or not we like certain words in our vernacular.
My point is: who cares about the origin of the word? IMHO, no one should. Unless the word used in a way meant to offend, it's fine. Otherwise you're kind of cultivating offense and over-sensitivity, helping it survive and grow, which helps no one.
It's trickier than that. There's a lot of people who are naturally aware of the history behind the word, and it's tough to remove emotion and intent from that history. Sometimes things bother people, and it's nice to understand why before deciding if you should do anything about it or not.
It's not necessarily limited to the ultra wealthy, but outside of a few key areas (as someone mentions, those profiting off of the inflationary spike, those in the real estate market, etc) it is more or less the case, yes.
How do you know that you're not the one hanging around the "wrong people" to know better? You could just as easily be surrounding yourself with wealthy people as they could be with non-wealthy.
Without data, it just sounds like "my social circle is more indicative of reality than yours". Maybe it is! But maybe not, so it's not particularly convincing
I'm not the only one with access to data though, if you're wanting to hold to your beliefs unless someone does the legwork for you and attempts to force it on you, I think your bias will overcome. Here is a source to begin anyway.
The middle class (especially upper middle) saw their share of income drop, but the bottom 50% increased.
Talk about missing the forest for the trees. The bottom 50% saw a 0.2% increase (to just 21%) over 5 years. OK, this is technically more, but it is a paltry increase of a tiny base spread out across so many people. It is reasonably seemingly imperceivable to any individual in the group. The top 10%'s increase, on the other hand, was greater than this. A greater percentage increase on a slice of pie that was almost twice as big. In the larger context, this just shows greater inequality.
If people are saying they feel the squeeze, even in social media comments, they are probably being honest.
"The Census Bureau measure overstates current income inequality between the highest and lowest 20% of earners by more than 300% and claims that income inequality has risen by 21% since 1967, when in fact it has fallen by 3% ... In 2017, among working-age households, the bottom 20% earned only $6,941 on average, and only 36% were employed. But after transfer payments and taxes, those households had an average income of $48,806. The average working-age household in the second quintile earned $31,811 and 85% of them were employed. But after transfers and taxes, they had income of $50,492, a mere 3.5% more than the bottom quintile."
Data is also a really, really potent rhetorical tool, because it is definitionally never complete (a map that fully captures a territory is the territory), and by those omissions, the data can be made to say anything at all in a way that looks unbiased.
Bottom 50% is increasing income with the top 10%, it's the middle class that's declining in the last 5 years. This was a quick google search, so I'll ask you to provide a source that's contrary else your comment was purely rhetorical and made in bad faith.
There is but you have to ignore the lived reality that Americans are struggling to afford healthcare, housing, utilities, education, and food costs all while the ultra wealthy are demanding the public invests trillions into vaporware.
maybe the disconnect here is the claim was about 'income' which in isolation of living conditions, perhaps continues to rise and thus by the most narrow and useless definition, the OP is incorrect
Things barely increasing after nearly 40+ years of being completely flat isn't the win that poster thinks it is, maybe if you're doped up on neoliberalism it sounds nice but everything else people need to survive are also increasing in costs massively.
Not American here. I know a couple of people who took out a second mortgage to buy a small appartement to rent out when mortgages rates were at 1%. They probably have €300k in equity in both the primary and secondary home. And around €600 in income from the rental. I do not consider that wealthy.
I would describe that as having invested in an appreciating asset (like stocks), and their main income comes from the gains of the property prices as they go up in value. Moreover, they leveraged themselves via loans to acquire income even faster.
These gains might be realized at any point if they're willing to pay taxes for them.
Having lots of money but choosing not to spend it doesn't make you any less wealthy.
The annoying/sad/infuriating thing is the ultra wealthy don’t have “income.” Technically, according to IRS rules, much of what they experience (housing, food, etc) should be classified as income. But their lawyers and accountants help them keep that looking quite low.
This report is only about wages, so even if the ultra-wealthy reported their real sources of income, they wouldn’t shut up as “labor” the way this defines it.
Capital gains not being considered earned income is simply sensible use of terminology to categorize different ways of amassing purchasing power. For example, in order to carry out the linked analysis.
I used to think this - but when I talked to a tax lawyer friend and we walked through the steps they take, usually they're just deferring taxation that does end up getting paid by an entity eventually.
Not the commenter you replied to, but one thing to note is that capital gains tax (at least in the context of investments in corporate equities) is applied after corporate taxes. Profits and reinvested earnings are taxed as profits, and they're two of the key components to valuing an equity.
As such, when comparing income tax and capital gains, you should add the impact of corporate taxes. Incidentally, corporate taxes are why many small business owners pay themselves wage income, rather than doing stock buybacks or dividends.
> Incidentally, corporate taxes are why many small business owners pay themselves wage income, rather than doing stock buybacks or dividends.
You've been sold some BS. Usually this is because you're required to take a "reasonable" wage for your role in a company. Otherwise I guarantee you every independent contractor out there (among others) would be operating in a way that made 100% of their income business profit, rather than wages, as it has enormous tax advantages. Approximately everybody tries to find out the least they can take as wage income without pissing off the IRS, and sets their "wage" to whatever that is.
Many locales have laws that do not allow remuneration above the 'reasonable wage', to prevent tax circumvention by having employers spread wage payments across multiple family members of employees, but I am not familiar with any jurisdiction with a minimum reasonable wage law or regulation. Could you please link some source for the claim that business owners are required to accept a 'reasonable wage'?
This would be my personal preference, as I believe that voters often overlook the impact of corporate taxes, and there are just too many (different) taxes.
I am not saying that one party paying taxes means that no counter-party should. I am just saying that the impact of different structures should be accounted for.
If the income was earned through dividends, maybe this would be a reasonable argument. Most of the time stock just gets bought and sold by investors rather than the company itself though, so it's not clear why corporate tax would have anything to do with this.
Sure, the stock price should somehow be tied to the actual value of the company, but for a while now it's been mostly indistinguishable from a Ponzi scheme other than a few companies that do sometimes decide to buy back some stock, which makes it slightly less sketchy but if the value is from the company buying it back, it's a lot closer to debt or a bond, which is not at all how anyone treats it.
I agree that in a bull market, many corporations are not purchased and sold at book value. That said, we are on the largest bull-run in history, so we shouldn’t treat this as the norm, and base all our long-term decisions on the current situation.
If they donate the wealth to their own foundation to continue to hold close and control, it doesn't get taxed. If they borrow against the wealth at low interest rates until they die and the basis is stepped up ("buy, borrow, die"), it doesn't get taxed. Certainly, deferment is a component, but there are obvious examples of the very wealthy operating in a manner to avoid taxes entirely when they're able to (realizing the benefit of the wealth without having to realize a taxable event). Trust stacking is a recent fad as well, although I don't have enough data to say whether it is a material concern from a tax revenue perspective.
The cases you're talking about are all delaying taxation, not eliminating it. Eventually someone has to draw that wealth - the foundation has to spend for public benefit to be eligible for 501(c)3 status, for instance.
I also don't think they addressed how borrowing against the wealth doesn't require any immediate taxes (and is often low interest, given how being a billionare means you get more favorable terms). There's nothing stopping someone in that position from just deferring taxes on the money they currently have, borrowing against it, and then investing that to turn into more money with taxes deferred even further so that they can use the proceeds to pay the previous deferred taxes and keep the difference.
That requires their investments to keep going up in value. That doesn't last forever, the assets that people borrow against eventually need to be sold to pay back that loan. When they sell to make payments, those are taxable events.
If any significant part of that article is true, I see self dealing that would already be against IRS code. It's just a matter of enforcement. We often already have the laws to solve the problems we identify.
Not at all. The real estate share of income is probably at its highest among a lot of people who belong to the non-labouring class, but are far from ultra wealthy. But it's nice to have a scapegoat, isn't it?
If you belong to the 'non-laboring class' you are by definition the ultra wealthy. It's wild how much people are willing to slide goalposts to make themselves feel better.
While about 50% to 60% of the adult U.S. population are active W-2 wage earners at any given time, the percentage that relies on labor exclusively (meaning they have zero capital income or assets to fall back on) sits right around 40% to 50% of working households.
More accurate to say that the US has been opposed to workers controlling the firms they work for. But the capitalists dangling just enough of a morsel to get the workers to dance 80 hours a week, but without the ability to actually control anything, and without majorly diluting? Chef's kiss.
Every share is a voting share. There are a small number of weird cases (e.g. Meta super-voting shares limited to Zuck), but your statement is broadly false.
isn't this the expected/intended outcome of the economic policy we've held for a generation or two?
the capital/labor class gap increases when total returns on capital investment exceed total wages+redistribution to the labor class, and the gap shrinks when that's reversed. the market ~controls the capital gains and labor wages knobs, and society decides where to set the redistribution knob.
the article investigating the post-covid drop and concluding that it's normal is an interesting rhetorical device. on one hand, relief that nothing crazy is happening. on the other hand, disappointment that we've accepted a growing inequality gap as normal. the gap was already at a post-war max going into covid, the floor gave out 20 years earlier and covid was just gas on the fire.
advancements in automation and tax codes that benefit capex over payroll will continue to incentivize business to shift budgets from labor to robots.
Interesting that most of the decline happened in the 2000s. The graph shows a large decline from ~2000 to ~2008 which continues after the GFC before going up a bit in the 2010s. The drop off since COVID is comparatively small.
Are there hollistic analysis? I generate income with my labor, but I also save in retirement and investment accounts. On analysis like this that we typically see, are these two things competing? Are we really just seeing a rise in retirement savings?
I think this is part of a long term development where technology and globalization slowly erode workers bargaining power. Basically you only build a factory in the US if you can keep labour costs low enough and the manufacturing automated enough so that you can still compete with other manufacturing hubs.
I don't have time for a longer comment, but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates. The doctor, lawyer, financial advisor, CPA etc. that in past decades would have had his/her income run through a W2 arrangement shifted to becoming a one-person corporation
That said, it's a huge pet peeve of mine when someone makes a statement, and then provides sources to back up that statement, but the actual sources contradict their original statement.
You stated "but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates." But then your very first linked article states "First, about a third of the decline in the published labor share appears to be an artifact of statistical procedures used to impute the labor income of the self-employed that underlies the headline measure."
I think there is a huge difference between 1/3 (while still a lot and an important factor) and what you wrote, "mostly a statistical illusion", especially since other substantial factors proposed in that article are things like offshoring.
Exactly. Crazy you are getting downvoted for having the most informed comment here. The other aspect of this is the rise of franchisees in America. Previously, the salary of the manager of a corporate store would be measured as labor income. In a franchise, it would be measured as capital income.
People tend to get excited when they can't eat and despite its timidity America is exceptionally well-armed. That sounds cute in a post drone strike world, but if the government attacks its own citizens like that, they'll have a hell of a time defending that position to the rest of the world. Humanity is usually slow on the uptake but eventually settles on "how about you just go fuck yourself" even if the party takes a sec to get going.
Who knows. I think it's better to err on the side of optimism despite the grim outlook.
That has already happened. The entire industrialized world is feudal. Young workers who are experts in their fields working full time can't afford a simple home. Young business owners who employ several people full time can't afford a simple home.
Not much. Early economies relied on mutual trade. I give you X and in return you give me Y. Soon we realized that you cannot always give Y in return immediately, so we invented accounting to keep track of your promise to give me Y at some point in the future. As time went by eventually we stopped caring about getting Y back in return and started taking an interest in collecting the promises themselves (i.e. profit).
Why would someone want to collect promises? That seems rather silly, right? What having a lot of promises gives you is social standing. People treat you differently — better — when they give you their promises. If traditional labor goes away, the economy simply becomes you promising to hold those who have things in the highest regard; to be there as their friend when they call for you to. That is the same modern economy we already have but with less steps.
As a hardware founder, I’ve seen the opposite until very recently. Labor cost has been going up much faster than inflation, at lease in hardware assembly.
According to the article, automation (including software) and other technology "advancements" are important factors.
I think it's becoming clear that we are reaching a point where UBI must be debated in Congress subsidized by something that doesn't wreck economic growth and probably doesn't target capital investment.
What happens if large cohort of Boomers retires and stop working, instead living on their savings? Labor share of income drops. If you remove this effect, the labor share of income is flat - confirmed by last week's analysis in The Economist.
Yikes. Good to know that labor shares used to rebound after crises, but since the 2000s and the dotcom bubble it has basically been downhill only. So don't expect any of this to get better unless we roll back technology to the last millenium.
It's not the tech but who sees the benefits. The issue at play is the monopolization and concentration of power.
Ie, why can one guy who is insanely wealthy due to stock valuations take loans against that to pull various levers of power. We didn't elect him, we need a way to control that outsized influence.
Not technology - that's only downstream of politics.
No political administration in my lifetime (!) has made policy decisions against the interests of tech monopolists. The closest we got was Lina Kahn's FTC.
Technology isn't the problem. The problem is the generation in governing power through the last 2 decades has no problem burning down the country's future to maintain lavish retirement funds for themselves.
I think it's more nuanced than that. There surely are plenty of cases where that is the case, but it's also a natural effect of hyperfinancialization, which many really do believe to be a "net positive" for the stability it brings. There's also the natural tendency of consolidation and centralization of power, and the natural counter-balance to that has been suppressed. Then you have legislative incompetence, the general failings of scientific governance aggregating over time, and many other structural flaws that are deeply seated and long-running.
We shouldn't just be pointing at the (very much real) stupid greed, there are many rotten components occurring simultaneously.
The most interesting takeaway I see in the labor share percentage graph is the trend that labor share increases into the recession. Post recession share trends down for a bit.
How much of the trend is due to employment trends vs. printing money for the wealthy to get their hands on it first(and profit) post recession?
Yes by design. Basically just by designating one part of the economy as non-productive consumption economy, and the other part as production economy, they create the justification for inflation - so that the government can have free money and take it from the stupid consumers by decreasing their wealth a little every year should they choose not to spend it, and give it (sorry, invest) to the nice productive entrepreneurial capitalist part of enconomy who will somehow reinvest it allegedly (read: mostly buy up shit the former half needs and sell it back to them at markup), the system has a direct wealth transfer mechanism that points from the poor to the rich, it couldn't be any more shameless and obvious if they tried.
I wonder if labor itself will become an anachronism in the age of AI. Perhaps the future economic landscape will be dominated by capital because everyone will own capital. You will command a small army of agents to do whatever you want. You will no longer need to work for someone. You own small businesses far more than you could possibly operate in the pre-AI era and they will mostly operate autonomously with minimal direction and some guidance from you.
We live in a world with a severe housing crisis - not shortage, as there are usually enough units, people just can't afford them.
One would assume the difficulty of building housing has gone down with the general progress of technology - and if all else fails, you can just do what they did 50, 100 years ago where affordability was far less a struggle - people, who had less income in real terms spent proportionally less on it.
So did society devolve that an unit of industrial output has become more expensive? Or did money and resources just go into a parallel 'rich people economy', that has created a constant drain on the resources of average people?
Assuming your labour contribution to these agents is 'minimal':
Why would you own them, instead of some well capitalized billionaire?
To the extent that you do have capital, why do you assume that your 'minimal direction and guidance' would outcompete a full time specialist working for that billionaire?
It's basic economics; larger firms become progressively less efficient for the same reason that communist command economies are inefficient, because there's no internal price signals to guide resource allocation. So there's a natural cap on how big a firm can get (in information theoretic terms, there's a hard limit on the amount of information a centralized structure can process effectively).
> Parking and speeding tickets should have income brackets, at least
AFAIK in some countries this exist but my case is more capitalist oriented. Rich people obviously can pay more since they keep accumulating wealth. It is an obvious sub optimal pricing since the low and even middle class rent/mortgage and other services quickly approaching the most they can pay so they can’t actually save and make wealth.
The longer I participate in the economy the more it starts to feel like the end stages of a game of monopoly. There is nothing left to own unless you already are wealthy and the only way to get ahead is luck.
this is relatively unremarkable for those with an understanding of wage, labor, profit, price and capital.
capitalism will always seek to reduce labor cost. during the epoch of neoliberalism it achieved great strides in this by reducing labor power through union busting by both thatcher and reagan in the UK and US respectively. it has also effectively curtailed any increase in the minimum wage for nearly 20 years as well as reduced protections, regulation and prosecution for wage theft and overtime pay violations which it maintains as exclusively as civil matters while ensuring theft itself from a merchant in turn is always a criminal matter through the primacy of private property.
to learn more i recommend reading Marx's "Das Kapital," albeit its rather academic. Engels "wage labor" is also a good read to understand why housing is so persistently unaffortable but helps to understand why any other good or service slowly becomes so as well.
The problem is we are one step beyond capitalist exploitation as described by Marx - basically the surplus which fatcat industrialists extract from the laborer does not really exist - you have to compete in the market with others who do the same, and offer things at the lowest possible margins, and if you need to be big enough to get capital in, you have investors who demand their profits.
So basically you are squeezed between the public demanding lower prices and the investors demanding record returns. If you are not a monopoly, that is an impossible ask
Basically the only truly profitable businesses left out there is selling hopes and dreams to investors, and shovels to those who build them, which just about describes tech & AI, with companies who regularly manage to 10x their valuations (and P/E ratios)
Marx fails to imagine a world in which labor actually has little to no value.
His worldview is primarily that capitalists 'steal' the valuable labor. However it doesn't seem that that is actually the world we are in. Instead the intrinsic value of human labor seems to be slowly trending towards zero.
And it kind of makes sense, same has happened with oxen labor, horse labor, etc.
Isn’t it the complete opposite? i.e. high automatization means that a single worker can create many times more value than before. However it reduces the demand for labor and worker bargaining power. So companies have no incentive to pair “fair” wages.
That is true but likely only temporarily. Why is the single worker even needed?
We tend to have a pretty human-centric worldview so if there's a single human working to keep a hotel running, our default is to attribute all the generated value to them when it really isn't the case. You can imagine that hotel at some point in the near future goes from requiring 1 worker to keep it running to zero.
> Marx fails to imagine a world in which labor actually has little to no value.
Marxism was an idea formulated especially as a reaction against a world where labor has lost almost all of its value. Which is precisely the origin of capitalism - the idea that money itself can be productive, and thus people who have lots of money can be expected to get more of it.
This was an untrue idea for most of human history, outside of the circles of moneylending and banking.
It doesn't seem like the value of human labor is going away. If you look at luxury goods, they're still "handmade". Telecoms still advertise human representatives. Nursing homes still charge massive amounts for personal service.
What's changing is how much of that surplus value is captured by the workers doing the labor.
> Workers enjoy highest living standards of any time in history.
It's entirely possible for someone to be paid a lot in absolute terms, while at the same time paid very little relative to the value that they produce which is monetarily captured by their organization. The truth of the first does not invalidate the injustice of the second.
This is clearly heading in a direction where the USA is going to elect a huge number of socialists, who in turn are going to enact massive taxes on billionaires and break up the monopolies.[1]
This is why I think the billionaire oligarchs are literally mentally ill. They've won the entire game. They control everything. They live like gods, they twitch a pinky and millions dance.
But their response to all of this power is to seek even more of it, destabilizing the very system that has them on top. You would think self-preservation would kick in. The fact that it is not and that their greed knows apparently no bounds is going to lead to their extinction.
For a long time I thought it was hyperbolic to say so, but no longer -- the billionaires are mentally ill.
I very much doubt that. There isn't enough class solidarity to pull it off.
There will be a few who brand themselves as such. But actually seizing the means of production and handing them over to the people? -- The oligarchs will burn this country to the ground before they permit that to happen.
It would of course be lose-lose for everyone. But if a significant proportion of the population starts believing (rationally or not) that they have nothing left to lose it could be problematic.
I too don't believe that GP's dream is going to happen, but the current momentum is much stronger than in the OWS days. Maybe it's less visible to some because the world has moved into online algorithmic bubbles rather than people camping in front of Wall Street. If they were more scared back then than they are now, it's not because the current momentum is actually weaker.
Well yeah. This is why we're calling end-stage capitalism. What's coming looks like technofeudalism.
All companies are rent-seeking. Selling something is no longer a goal.
Prices go up up up up up.
Oligopolies and price fixing is normal.
Monopolies are normal with little/no controls.
People are getting paid a pittance to the work done.
Unions are their weakest in a century.
NLRB is basically frozen due to no quorum on the head board.
Companies routinely scam and lie at multiple places in hiring pipeline. FTC does nothing.
Neither party (Republicans or Democrats), save the DSA, fights for the American people.
Its all coming to a head, and baskets, and guillotines. Anybody who studies history knows what kind of powderkeg this situation is. Its also the reason the Ancient Romans made panem et circunses (bread and circus) cheap or free. You get riots and revolts otherwise.
I find this metric misleading. Where is the extra money going? To whom? Turns out most of it is not going to billionaires. Bulk of it is going to future investments. If we choose not to do that, we lose out on future gains.
It's not naive, it's near optimal. The system rewards people who've done well at capital allocation with more capital to allocate, and takes capital away from those who've done poorly at it. And there's no better predict of future performance at allocating capital than past performance.
Now consider this against the rising productivity-pay gap that has been widening since teh 1970s [1].
The big picture here is increasing wealth inequality and that has been on steroids since the pandemic.
The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
But even if that's true, don't you want to live in a society where you don't need armed guards at your house and you don't need armed escorts to go anywhere? Because that's what we're heading towards. One of the problems with American society (in particular) being so car-centric is that it lets people insulate themselves from the rest of society more easily. In cities like NYC you're forced to see and deal with the less fortunate. You can't hide from it so easily.
We don't need trillionaires. We need to raise basic living standards so people have food and shelter and we don't need to separate society into slums and armored compounds.
> The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
Software engineers are a special kind of stupid: the kind that thinks they're smarter than everyone else.
Not even just Republicans, unfortunately. The generation of Americans who grew up in the Cold War were inundated with propaganda about how socialism would destroy America, and then go and say things like this https://www.nytimes.com/2026/06/26/us/politics/moderate-demo...
The actual labor share of income is significantly higher when you include employer contributions to employee health insurance premiums. Healthcare costs have been rising faster than overall inflation for decades, and while many of those costs are passed on to employees the employers have also absorbed a significant chunk. If we want to increase the labor share then we'll drive down healthcare spending.
And no, there's no simple solution to this problem. The notion that something like "Medicare for All" would solve the problem is a total fantasy, disconnected from actual US healthcare economics. Any real solution will have to work on multiple angles including preventive care, PBMs, provider wages, rationing, drug prices, fraud, malpractice insurance, interoperability technology, etc.
Why wouldn't a single-payer solution work? The margin that the insurance companies take for themselves seems like a good place to start. From there it would spiral out to the third to half of time that all of the clinical staff spend just dealing with insurance issues and insurance billing.
I'm not necessarily opposed to a single-payer system but the margin that for-profit insurance companies take is a tiny fraction of overall healthcare spending. You could zero it out and it would barely move the needle. And many of the largest commercial health plans such as most Blue Cross Blue Shield Association members are non-profit. There is literally no margin.
Provider organizations spend a huge amount of effort dealing with Medicare and Medicaid, which are pretty close to being a "single-payer solution" already in many cases. From an administrative overhead perspective they aren't always easier to work with than commercial health plans. Plus they have enormous problems with fraud, waste, and abuse.
The mandated low margin is part of the problem. When your margins are regulated, the only way to increase profits is to just make everything more expensive. More revenue, same margin, more profits. Humane health care is incompatible with free market economics.
Perhaps its not compatible. But that’s tangential to the situation in the US, at the very minimum you need to have price transparency in any ‘free market’ system.
I'm not trying to be snarky here, the point is that there is no easy solution and optimizing based on what politicians subjectively consider "humane" isn't going to get us anywhere. If we want to actually fix the problem then we need to focus on what's economically feasible rather than low-effort hot takes and sound bites. Free markets, with reasonable limits, can be part of that solution by revealing consumer preferences and allowing for efficient allocation of limited resources.
> Is it humane to leave a patient to die in an ambulance when a single-payer nationalized healthcare system is over capacity?
I think painting the inhumanity of that as a consequence of the structure of the healthcare system is disengenuous at best, especially as the implicit solution you're proposing is to artificially lower utilization rate and access. Deflecting patient deaths into "technically not our fault, they didn't try to get help" by exploiting economics is in no small terms extremely inhumane.
The answer to that is that near universally in the world, our labor pool of medical personnel is too small, and almost all of it has to deal with an arbitrary restriction of labor supply. Stupidly, I have felt this many times in America, so trivially it's a problem no matter the structure of the healthcare system. Optimizing towards maximizing the number of nurses, doctors, pharmacists, the whole spread, in a society is underdiscussed but obviously beneficial (for everybody but those who profit off of the labor scarcity)
is it humane to solve that problem by excluding people based on income? that's what your proposing, as that's how markets solve problems like this: if more people need a product/service than the market can provide prices go up and the poor are excluded. also not trying to be snarky but that's the choice in front of us. part of the problem with free market solutions to healthcare is the feasibility of walking away from a bad deal. in every other space prices are regulated downward by the buyers' ability to either buy something else or do without but there is no doing without emergency care and doing without preventive care is just deferring the cost until it's emergency care at punitive interest.
Stop lying, I haven't proposed anything of the kind. Free market solutions often include giving cash subsidies to certain participants (and you would be aware of this if you had bothered to do even basic research on serious healthcare system reform proposals before commenting). I'm simply pointing out that it's a complex problem with multiple causes and there is no simple solution.
Even cash subsidies can be a kind of chain. Why wouldn't we just subsidize the whole thing for everyone then? And if the purpose of a health insurance plan is to collect groups of people into "risk pools," then why wouldn't we just put everyone in a global risk pool? And if the purpose of a health insurance plan is to negotiate rates on behalf of a bunch of people, why wouldn't we have someone like CMS determine those rates? And if the purpose of a health insurance plan is to make sure everyone has health care, why would we create a system where people are excluded by means-testing?
I don't think the core issue is the health insurance companies stealing money, it's the deep inefficiencies that come from the position the insurance companies hold.
How many man-hours are spent dealing with insurance paperwork? How much do hospitals and doctors spend each year just dealing with that interaction, rather than treating patients?
> Plus they have enormous problems with fraud, waste, and abuse.
I'd say "enormous" requires some evidentiary proof. Obviously there is fraud and waste. But almost all large scale systems have that. We should certainly try to minimize it wherever we can but I don't think "waste and fraud exist" are a reason to not pursue a path.
>I'd say "enormous" requires some evidentiary proof. Obviously there is fraud and waste. But almost all large scale systems have that. We should certainly try to minimize it wherever we can but I don't think "waste and fraud exist" are a reason to not pursue a path.
Are you living in the same country as the rest of us? There is plentiful evidence of the enormous fraud and waste. It’s not even a point of debate anymore.
For what it's worth I know you've worked on FHIR and probably know a lot of details I don't. Actually I'd be interested in talking to you about FHIR.
That said!
1) In the big picture isn't the US clearly paying more than other countries? I'm sure some of this is eg a janitor in the US costs more than a janitor elsewhere, but still...
2) Isn't the cap for the margin that insurance companies can take 20%? That is, they have to pay out 80% as claims take 20% for overhead
3) Doesn't insurance also induce more work done by everyone else who has to deal with them? So the margin the insurance company itself takes is not the only cost they add. Maybe they make providers do more paperwork, or let patients order tests etc that they would not if they were not spending other people's money, or some other reason. Say insurance pays out 80%, but 30% of documentation or actual work is not done by insurance but only exists because of them, now we're down to 56%.
I say this because literally yesterday, my wife, a pediatrician, after she spent the day seeing patients and got home to go through notes, had to leave a message with an insurance company: she saw they faxed her clinic on Saturday, when the clinic was closed, to cancel care for a patient with an ongoing chronic condition with no changes unless the insurance company got a reply in 48 hours (again, while the clinic was closed!). Now she has to schedule some kind of I don't even know what with them, to confirm the condition is the exact same, except she sees patients all day so it's a pain to schedule...
idk the fact that BCBS is a non profit and has no margin in some technical sense does not seem like a big consolation, something is rotten no?
(edit - the insurance company in the anecdote is not BCBS)
I've worked on a lot of healthcare interoperability standards, including HL7 FHIR. Those can be part of the solution in terms of making the system operate more efficiently and cutting administrative overhead. In many cases payer and provider organizations are still doing things manually that could be automated using existing standards. But they fail to do so due to lack of vision and insufficient technical resources. Literally everything that can be done with a fax can be done faster and better with X12 / NCPCP / DirectTrust standards that have been around for years and are widely supported by commercial EHRs.
It's true that no matter how you look at it, the USA spends a lot more per capita on healthcare relative to outcomes. But you have to be careful what outcome metric you look at. Like we're not doing great on life expectancy, but much of that is due to factors largely outside the healthcare system like violence, vehicle crashes, and lifestyle choices. And in other areas like 5-year cancer survival rates or new drug development we're at or near the top. Part of the problem in the USA is that we seem to be culturally incapable of admitting that rationing is needed, and that it simply isn't feasible to deliver excellent care to everyone, so political reform debates devolve into sound bites about "death panels".
The Affordable Care Act (Obamacare) set a minimum health plan medical loss ratio of 80%, or actually 85% for larger plans. And in practice most come in higher than that due to competitive pressures.
There's a huge amount of administrative overhead in dealing with health plans for things like claims and prior authorization. Much of that is imposed not so much by insurers themselves but by employers who want to hold down costs. Like a commercial insurer would be happy to sell a plan that would pay every claim immediately at 100% with no questions asked. It would be less work for them. But no one would buy it because costs would explode. Medicare and Medicaid plans also have prior authorization and peer review processes. Something like a quarter of all healthcare services are "low value care" which doesn't align with evidence-based clinical practice guidelines and may even harm the patient, so when health plans apply review processes the right way then ideally it's better for patients and holds down costs for everyone.
To be clear, I'm not here to defend commercial health insurance companies. They are part of the problem and some reforms in that area are sorely needed. But let's have an honest debate about it and stop pretending that eliminating them would solve the deeper systemic problems.
There are countries in Europe which have entirely privatized healthcare systems (not even medicare/medicaid equivalents). US tried adopting some of their practices with Obamacare and even that didn’t work out. Singlepayer isn’t really necessary to have a reasonably affordable and accessible healthcare system proper regulation is.
As successful as Obamacare has been it didn't really do much to lower the cost of healthcare or claw back the billions wasted to insurance company profits. There might be some kind of regulation just as effective as single payer, but we've never seen it anywhere in the US.
> As successful as Obamacare has been it didn't really do much to lower the cost of healthcare
It dramatically lowered the cost to consumers. Further, conflating overall healthcare spend with the portion of spend tied to a significantly lower-cost population is apples and oranges at best and represents a fundamental misunderstanding of healthcare cost in general. It's ok to not have opinions about things you know you don't understand.
insurance issues are provider and insurer going back and forth detrmining if doctors assessment of necessity is agreed upon.
i am not familiar with universal system. In that system if your doctor thinks something is medically necessary then thats the end of it and its gets done?
In my experience, insurance issues are usually insurer and patient going back and forth and then patient getting 6 different answers from 6 different representatives, then reviewing the 3000 page plan document, finding the single line that properly describes what should have happened, calling the insurance company, explaining to the rep how your plan works, and demanding that it be reprocessed. Like my wife has to do this frequently and spends several hours per month dealing with this but she has saved us probably tens of thousands of dollars in mis-processed claims that the insurance companies can't even properly handle. I usually am the person carefully reading plan docs, finding the proper billing codes, and explaining things like that to the insurance company. Sometimes we have to get the doctor's billing people to code things, like once they coded something that was an outpatient appointment as a minor surgery which could have cost us a lot of money.
So in my book since we get to speculate about what the system should look like, it should absolutely result in people getting care without all of this run-around. It's about eliminating as much misery as possible from the system and letting people just get treated and providers just get paid. We can talk about efficiency once the misery is gone.
All healthcare systems have some form of rationing. Even if your doctor thinks something is medically necessary it can only get done if the system actually has capacity.
In most countries where there is universal coverage with a single payer, certain expensive treatments have long waiting lists or are simply unavailable at any price. Thus we see wealthy Canadians coming to the USA as medical tourists and paying cash for procedures like MRI scans or joint replacements in order to avoid the queue back home. There are always trade-offs, it's just a matter of what we want to prioritize.
You're citing some of the results of a runaway healthcare industrial complex, such as drug prices, as reasons why the thing that would keep such a complex from emerging won't work.
Employers might be contributing more to healthcare costs, but that's because they have to in order to keep coverage for their employees at all as premiums increase, and individual out-of-pocket costs are still rising as a result of coverage denial and high deductibles.
While healthcare spending isn’t included in some economic measures like wages (which has contributed to the distorted productivity-pay gap discourse), labor share as discussed in this article is actually calculated using total compensation, the “total of payments to labor to produce output, including wages, benefits, and other monetary or nonmonetary payments,” which includes employer contributions to medical care not just wages and salaries.[0] They do discuss payroll share later on though, which doesn’t include non-wage compensation.
I've built and audited medical billing systems and billing practices. It isn't an economics issue in a traditional sense. Infact it would drastically reduce complexity of these systems and payments over time, even allowing private insurers to exist but have to compete with a base general coverage. (many smarter people than me at princeton did economics showing this worked out as a net less expensive than what we are doing now) The biggest reason why its not the simplistic solution, is politics of all the middle men (me) making exponential returns from solutions to these systemic issues.
Too much money in the system being flawed, look at pricing for any HIPAA safe products and thats just technology. Money is so hard to get for healthcare providers it is its own industry of revenue cycle management and thrid party billers. Most of these physician lead practices charge more is because planning your account around reemburcement cycles from insurance companies are 30-120 days if your lucky is an advanced accounting problem. (Thats excluding complexities of audits, LOPs, network rates etc.) Medicare/medicaid the fraud side has lots of tiny wins through leaning on tax information more, taking the model from the successful basic income studies and trials worked out.
I'm not sure what you mean by pricing for "HIPAA safe products"? It's not particularly expensive to comply with the HIPAA Privacy Rule, and honestly that level of privacy and security is the minimum we ought to expect in any industry that deals with sensitive consumer data.
There aren't as many physician-led practices anymore. Most of them have been rolled up into larger health systems in order to achieve economies of scale and increase negotiating power with commercial health plans. Which is one of the factors driving up overall healthcare system costs.
Do other countries' state healthcare system costs count towards their labor share of income? If not, it seems sensible not to account for them that way in the US, or you're creating a much more serious apples and oranges problem for international statistics (which are often cited/compared for these figures)...
> If we want to increase the labor share then we'll drive down healthcare spending.
It may not be simple but it's clear the United States is doing something catastrophically wrong. All the other healthcare systems on the planet in developed countries have problems, sure. But we spend magnitudes more money to receive middling-to-shit healthcare. Medical debt and bankruptcy is a unique American problem that also happens to be the most reliable way for otherwise productive and prosperous members of our society to end up fucking homeless. Because they got SICK. I rarely use the word "evil" but that really fits IMO.
Like you cannot tell me with a straight face that the insurance industry couldn't be blown the fuck off the map tomorrow and literally everyone who doesn't own an insurance company isn't instantly better off.
If the insurance companies disappeared tomorrow, presumably all medical care is paid for at point of use by patients? That would mean stochastically facing catastrophic bills from providers. I am sympathetic to the idea that healthcare providers and systems here should be making no more than in, say, Europe, but an orthopaedic surgeon being paid the $300k USD-equivalent in Germany instead of his $750k USD income today at median would be very unhappy.
There are certainly some things that we could do to increase the supply of physicians by reducing the cost of education, expanding access to combined BS/MD programs, and increasing the number of residency slots. But those measures will have marginal effects, and take years to show up in supply numbers. There just aren't a lot more people who are mentally and physically capable of doing this work.
Part of the problem is that we force physicians to waste too much time on administrative work. Some of this could be delegated to cheaper employees or not done at all, thus effectively increasing supply. Administrative overhead is also one of the factors driving physicians to quit and pivot to other careers or retire early, which further constrains supply.
This part is controversial but we'll also have to shift a lot of primary care to Physician Assistants and Nurse Practitioners. Care quality might be lower in some cases but for routine conditions it's probably better to see a PA/NP today instead of waiting weeks for a physician.
Sure, but the rare type of person capable of becoming an orthopedic surgeon has other career options. There are some who are drawn to it as a calling because they love caring for patients and would do it regardless of wages. But most respond to economic incentives, so at the margins some will choose to go into technology or finance or something and make more money there.
When we fix the price of something below the market clearing price then there will always be a shortage. This is inevitable. We might decide that having a shortage of orthopedic surgeons is acceptable but let's not pretend that there are no trade-offs.
Germany has a stagnant economy so it's easy for their healthcare system to pay doctors lower wages because they have few other options. Baumol's cost disease is a real factor in healthcare, and it impacts the USA more than most other countries precisely because our overall economic growth has been so robust.
If you as a person are turned off of a career because you can only make a mere, paltry peasant wage of $300k per year, then I think that's really a you problem there.
And as to your comments about shortages, we already have shortages.
Feel free to moralize all you like about the maximum wages other people should earn if that makes you feel better but that won't solve any of the actual problems. In the real world, most people respond to economic incentives. Shortages can always get worse. (I am not a physician.)
Are you telling me that $750K yearly compensation still isn't enough for an NBA player? Maybe they should be nice and agree to play for less because they love the game and want to entertain people.
If we're talking about orthopedic surgeons specifically, a good one is essentially an elite athlete. A single tiny error can leave a patient dead or crippled. It takes a rare combination of intelligence, ability to focus for hours, physical strength, and fine motor control. So only a minuscule fraction of people even have the necessary potential. And the training pipeline is necessarily long because they need a lot of reps to build up the mental and physical skills, and to weed out those who aren't suited. Sure, you can find some people who are willing to do the work for lower wages but will they be the right people?
Beyond the wage issue, supply for all physicians is artificially constrained by training system capacity limits, as I already explained above. There are things that could be done to make training a bit cheaper and maybe two years shorter. But the easiest win would be to make more efficient use of the existing supply by optimizing workflows, and automating or eliminating administrative tasks.
What the US is doing is nonsensical. Modern Healthcare is an industrial system designed to handle large populations in bulk. But it only works if everyone can get timely access. This is true for things like mass screenings and medication.
The insane thing is denying it to half of the population doesn't really mean the other half gets to save that much money in real terms.
I strongly agree that socializing the healthcare industry will not help in any way. To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance. Anyway, with respect to the labor share of income, that is not correct. Employer contributions to employee health insurance premiums are included in the labor share.
This is true in the sense that if I sell water in the desert at $100 a bottle, at 900% profit margin, doesn't mean that if the government steps in and pays half of it, that the resulting system is somehow good, just because less people are dying of thirst.
> To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance.
It fails to follow logically that one specific way the government got involved that drove costs up means that any possible intervention is worse than completely being hands-off. How do you explain pretty much every other developed country in the world having more government involvement but lower costs than the US?
When something is paid for from a big nebulous ball of money rather than straight out of people's pockets, the downward pressure on prices just isn't there in the same way. The conversations between practitioners and insurers are about whether something is necessary, not about whether or not the practitioner is charging too much for it.
Here in the UK we see it, too - not so much in human healthcare since we have the NHS - but very definitely in animal healthcare; vets' bills have skyrocketed over the last couple of decades, in a mutually-reinforcing feedback loop with the rise in pet health insurance.
Health care costs across the developed world have skyrocketed for exactly the same structural reasons. Yes, implementations have been different in their details, but the larger structure is the same no matter where you look in the developed world. Government intervention has increased. That means more top-down management and less bottom-up self-organization based on private property and individual incentives.
This is not some spurious speculation. That market-based systems drive down costs enormously is replicated across dozens upon dozens of industries. It's one of the most replicable results in economics to the extent that economics can be replicable. As for why the costs in other countries are not quite as high as the U.S., it's because health care costs also increase as per capita GDP increases and the U.S. has higher per capita GDP. Moreover, because the U.S. has some aspects of its health care system still living more in the private sector, there is less top-down rationing. Other countries see very clear examples of rationing, so people spend less on end-of-life care.
> And no, there's no simple solution to this problem. The notion that something like "Medicare for All" would solve the problem is a total fantasy, disconnected from actual US healthcare economics. Any real solution will have to work on multiple angles including preventive care, PBMs, provider wages, rationing, drug prices, fraud, malpractice insurance, interoperability technology, etc.
I have been saying this for years. I'm so tired of social media memes turning into sage wisdom for an entire generation who can barely spell healthcare, let alone have any vague understanding of it.
I'm and-then'ing, not disagreeing, but the big healthcare cost fix, IMO, still centers around education cost reform, and fixing the supply of mid-levels+ across the country.
That sounds good to me. Why should millions of Americans die every year because they can't afford their medications just so that other countries can get their meds at extremely low prices? Let's also have the US government negotiate our prices and let things even out across the board.
Removing a useless middleman party that needs a profit margin, and removing the perverse incentives of them having to prove their value thus having inflated prices with fake discounts, and centralising all healthcare purchasing power in a single entity, is absolutely going to solve a lot of challenges US healthcare faces
Is there a reference you can cite with corrected numbers? Honestly this sounds like excuse-making, especially when used as a jumping point into a decidedly partisan take (complete with scare quotes!) on the essentially unrelated subject of public health care financing.
The idea seems to have merit, but it's unconvincing to people outside your bubble and I'm dubious.
People are misreading the conclusion - the Covid related drop is normal and matches previous episodes, but the massive overall drop since 2000 is not.
The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
This is consistent with the observation that the top 10% have captured a disproportionate share of GDP growth over the past few decades.
https://equitablegrowth.org/new-data-reveal-how-u-s-economic...
"The past three economic expansions have largely benefitted the top 10 percent. In each, the top decile received between 47 percent and 59 percent of all income growth in the expansion."
Also note: Labor share has declined similarly across OECD countries for several decades.
Automation, robots, software etc. they are all capital share.
> Automation, robots, software etc. they are all capital share.
I highly doubt automation and robots are a meaningful factor here, but IP and outsourcing have the exact same as automation.
New factories use very few people, part of the reason why it's difficult for many countries to industrialize like South Korea or China did (climbing manufacturing ladder).
Employee compensation comes from capital. And employees are working at companies that provide robots, etc.
There's a return on capital than is not spent on employees. That reflects how much capital is growing and how much can be spent on employees in the future.
Every discussion about the 'top 10%' seems to make the underlying assumption that the set of people who fall under that category are consistent. While there are certainly individuals who enter the top 10% (or top 1%) and stay there; there are large numbers of people who move in and out of those categories.
For me personally, I am in the top 10%; but a few decades ago, I was not.
This is a good point I haven't considered in the past and worth to take into the overall discussion.
Aren't most of the tech workers here part of that 10% and I'd assume they own houses in some of the most expensive areas, so they are technically part of the capital class?
> amount of labor being generated per person has not really changed
not true, labor productivity has been steadily increasing: https://fred.stlouisfed.org/series/OPHNFB
workers are simply capturing less of the economic value generated by their labor.
Increases in labor productivity is a curious thing to think about. Do I deserve more wages for using AutoCad instead of drafting paper?
- The amount I'm working hasn't increased. Still an 8 hour day.
- My job honestly is easier than it used to be; certainly less menial.
- Strictly speaking, the education requirement is actually lower. It's easier and a lower bar to learn to become a decent designer in AutoCad than to learn to effectively use old drafting tools (even though the formal four year engineering degree still takes four years).
But it's also true that in spite of this, my output is higher. Should I capture the increased output or should the innovators of the tools? What about the firms that invest in procuring these tools and production technology? Should the customers capture the increased output through lower prices? Or should the innovators, firms, and customers all get less, and instead my wages should get bigger?
Salaries aren't about what someone "deserves" or "should earn".
Those in control will try to capture as much of the return as possible. How much value the worker captures is based on their relative power (ability to move to a higher paying employer, scarcity of skillset, laws such as minimum wage, etc).
> Should I capture the increased output
You do capture the increased output by benefiting from a society where the cost to build safe buildings has drastically reduced.
Just because you don't get an immediate financial benefit doesn't mean you haven't benefitted from the increased output.
> Or should the innovators, firms, and customers all get less, and instead my wages should get bigger?
In almost all of the cases the "innovators" are themselves workers whose share of the outcome has been dropping. And the "customers" have never gotten a piece of the profits; we are already past the point where reduced prices would have happened (competition) in this system.
And I think that by "firms" you really mean some combination of executives and investors/shareholders. That is where the gains have been centralized. Do you really want to argue that management and investors deserve to have more of the gains? What have they done that makes them so much more valuable than similar groups in bygone days?
Productivity is just aggregate output of the economy divided by the number of people-hours worked. You can argue about if that's a useful thing to measure or if the measurements themselves are accurate or if you should capture more of the output, but at root it's very simplistic. If you can use AutoCAD to generate more drawings than using paper which you (or your firm) sells for the same price per drawing, then your productivity did go up. Is that meaningful? Less certain.
In practice what happens is that on average the tool-user's wages go up slightly but most of the jobs in the field are eliminated, and the resulting large profit mostly goes to managers and financiers.
And many laborers have retirement accounts and pension funds that are also capital owners, so they benefit from increases in capital too.
Thats a good list of questions here’s another good thought provoking line of thinking:
As someone trading labour for a wage should I adjust my productivity to match the tools I’m using? That is to say if I’m using CAD should I bother using the tool to raise my productivity? Or should I just match my old hand drafting productivity rates? Should I attempt to raise my productivity rates with these new tools to meet or exceed the best rates from my coworkers?
What can we do to align my interests with those of my employer?
r>0 is not the problem, r>g is the problem, and that one's a lot less morally ambiguous.
Fair, but the year over year growth of labor productivity has been really consistent, as has consumer prices:
https://fred.stlouisfed.org/graph/?g=tjto
So in terms of how much consumers are making in relation to their expenses, it's been remarkably steady this whole time.
yes, but wage growth has not tracked productivity: https://fred.stlouisfed.org/graph/?g=1X020
household expenses have been increasing without commensurate wage growth, resulting in lower savings: https://fred.stlouisfed.org/series/PSAVERT
Chart goes up, but you really need to look at percent change. Over the last 25 years it's averaged about 2%
observation_date OPHNFB_PC1
2000-01-01 2.99256
2001-01-01 2.58092
2002-01-01 4.27146
2003-01-01 3.68422
2004-01-01 2.97991
2005-01-01 2.18582
2006-01-01 0.99665
2007-01-01 1.58927
2008-01-01 1.30737
2009-01-01 4.07061
2010-01-01 3.15513
2011-01-01 -0.02491
2012-01-01 0.93870
2013-01-01 0.59941
2014-01-01 1.00795
2015-01-01 1.27023
2016-01-01 0.61567
2017-01-01 1.49513
2018-01-01 1.40965
2019-01-01 2.13337
2020-01-01 5.30657
2021-01-01 2.06281
2022-01-01 -1.46786
2023-01-01 2.13277
2024-01-01 2.91010
2025-01-01 2.25154
2% is average. 1-1.5% is considered a slump, while anything over 2.5% is considered a boom. for instance, the post-ww2 boom (1947-1972) averaged 2.9%. at that rate of growth, a country's total output per worker doubles in roughly ~25 years.
Is this inflation adjusted?
Is this inflation adjusted?
The chart you're showing, absolutely reflects the reality of some of the most productive segments of our economy.
Ford now makes more cars, with fewer people. Sears used to have people who took photos, laid out catalogs, opened envelopes (with checks in them).... Amazon has none of that. We replaced switch board operators, with mechanical, then digital switching. More calls routed, fewer people required. go back 45 years and "draftsmen" was a job - replaced by auto cad.
All these industries have seen massive productivity.
Are the people flipping burgers more productive? Plumbers? Welders? Teachers? Nurses? -- to some extent yes, because of technology but not to the same extent as the previous businesses. Anything that qualifies as "service economy" work has not seen the same gains as Ford (see: https://www.aei.org/carpe-diem/phenomenal-gains-in-manufactu... )
Construction notably has had productivity losses since the 80s afaik.
> The situation on the ground is unchanged - the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us.
My understanding is that "fixed" costs like rent and groceries have gone up and taken more of people's budgets, while wages failed to catch up with this inflation.
If that's the case, it's markedly different from "situation on the ground is unchanged". I don't know how the overall pie is doing, but it has not grown enough to compensate for the labor share drops shown in the article. The slice on my plate is certainly lighter.
We have one of the worlds most prosperous economies, and half of the US is living in abject poverty while quality of life for everyone is decreasing.
I'm going to go on a limb and say half of the US is not living in abject poverty? Nor can I get behind the idea that quality of life for folks is on the down trend.
I own a Medicaid home care agency in 13 states. We serve low income families and our caregivers, who earn $12-18hr which is higher than minimum wage, absolutely struggle. We have created food banks and housing assistance because even working people are a few sick days or one car repair away from homelessness.
I would encourage you to go work with average Americans in average towns. The facts on the ground are stark and eroding.
I would fully get behind us paying service providers far more than we do. To wit, it baffles me when people are upset about how much we allocate to pay for services that go to older people, but then we don't do any effort to make sure the services are provided by younger people. Indeed, we seem to go out of our way to make sure the people providing these services are, themselves, low income. It is baffling.
But even this feels like it is overstating things. You say folks are one car repair away from being homeless. And there is a lot of polling that shows people would struggle to pay for repairs. But full on homelessness? I can only assume that you are describing towns/cities that offer no transport assistance at all, that lands people into being so dependent on a car. I believe it, but I struggle to think this is literally half the nation.
Median income in the US is much higher than $12-18/hr, it is about $30/hr. 25th percentile make $20/hr. 10th percentile make $15.58. https://www.bls.gov/news.release/wkyeng.htm
So, the people you are mentioning making 12-18/hr, are literally below 1 in 4, to less than 1 in 10. These are not “average middle class Americans” except maybe in that higher end. These are low wage earners and are far below “average”.
I mean absolutely nothing normative by this statement, nothing about whether this is good or bad or what we should do policy, socially, whatever. But saying someone making below the 10th percentile is average is like saying someone making $75/hr is average.
Someone could interpret that as a lack of capitalism rather than the opposite.
That is, Henry Ford changed the world because he deployed capital to make workers so productive that they could afford to buy the cars they make.
A person paid to do child care in an organization with overhead, who has to pay taxes, etc. is not productive enough to put their own children in child care. So child care fails to revolutionize the world the way the car did.
See https://en.wikipedia.org/wiki/Baumol_effect
> A person paid to do child care in an organization with overhead, who has to pay taxes, etc. is not productive enough
They are highly productive but the market doesn't value them. It values the backup forward on a basketball team - an almost completely non-productive job - more than a doctor. It values the owner of a company at $1 trillion, which is obviously absurd.
It's not "absurd"... you're confusing moral value with economic scale.
A $1T founder is rewarded for building a massive system that employs hundreds of thousands of people, moved technological progress forward dramatically, and has positively affected the lives millions.
A doctor provides life-saving care, but they are physically limited to helping one person at a time. A backup NBA forward might not save lives, but their work is broadcast and monetized across millions of screens at once.
Arguing that entertainment is "non-productive" ignores human nature. People gladly pay to be entertained. If sports have no value, do you feel the same way about books, art, and movies?
To get to the Baumol effect, the movie actor can perform once and be seen by millions whereas the theater actor has to perform at least once a night in front of one roomful of people. So the former can get paid more, a lot more.
Probably the highest paid athletes in the world are european soccer players and the thing there is that these salaries can be justified in terms of the value top players bring in a game where being relegated can bring the money train for a team to a halt. You don't see working-class soccer fans complaining about this (they feel the value!) but the owners and many representatives of capital get fuming mad about it.
(Funny, growing up in youth soccer in the US taught me to think of the game as an exercise in Brownian motion where there are too many people on the field who aren't held accountable. It wasn't until I had an argument with a recommender system that couldn't accept that I hated soccer that changed my mind and turned me into one of those sports fans who rolls out of bed Saturday mornings to watch the Premier League that I realized how high the stakes are in the European game.)
> Someone could interpret that as a lack of capitalism rather than the opposite.
In Capitalism surplus economic value goes to the Capital class, so it seems like it is working as designed.
Some goes to the capital class, some goes to workers. The Marxist eschatology is that there are pressures that cause the fraction that goes to capital increases over time and breaks the system.
Look at the good deal that the UAW has gotten for auto workers in the system, both US car makers and the union are pretty happy right to keep this system in place and shrink in the face of technological change like electrification not to mention abandoning small cars for large cars that are profitable for now.
(Funny how I often I see "good old boys" driving Asian compacts because they can afford Asian compacts, and I see office workers driving big-ass trucks)
>I own a Medicaid home care agency in 13 states. We serve low income families and our caregivers
There's an extreme selection bias there. If you run an agency that works with low income families you're not going to see a representative sample of the overall population.
> There's an extreme selection bias there.
Maybe. Unfortunately, what digitaltrees wrote here is ambiguous. It could also be read as this:
Our caregivers serve low income families. Those caregivers, who are our employees, earn $12-18/hr which is above minimum wage. Our employees absolutely struggle. Our employees are the ones using food banks and housing assistance because many are one car repair away from homelessness.
digitaltrees: which interpretation is correct?
I think the latter interpretation is correct. As in digitaltrees runs a business that does not pay its employees a living wage, who then have to rely on food banks and housing assistance.
If you read the rest of the comment you’ll find it’s about their employees rather than their clientele.
I think “abject poverty” is probably overstating the case a bit. I do think quality of life is trending downward given the fact that housing, food, gas, medical care costs are all increasing while wages are stagnant or worse.
>I do think quality of life is trending downward given the fact that housing, food, gas, medical care costs are all increasing while wages are stagnant or worse.
???
https://fred.stlouisfed.org/series/MEPAINUSA672N
Note this is already inflation adjusted, so "housing, food, gas, medical care costs are all increasing" is already accounted for.
That chart doesn't make the case you think it does. Real median household income rising can be explained by things like more dual earner households (more women working since the 70s), more hours worked, etc. The household income can rise while the wages can theoretically remain flat or even fall.
The more relevant statistic is that median real wages have only grown by about 29% across 40+ years (~0.6% per year)
Since 2000, medical care costs have risen by 121.3%, hospital services by 275%, college tuition and fees by 196%, compared to consumer goods by 86.1%. Things like TVs and electronics went way down in costs while the essentials have absolutely skyrocketed. The cheap stuff drags the average down.
You need a lot more than a single graph to argue against the quality of life going down for Americans.
> Nor can I get behind the idea that quality of life for folks is on the down trend.
There is a pretty clear down-trend post-COVID here.
https://www.federalreserve.gov/publications/2025-economic-we...
If you have negative net worth and the bank's money, not yours, is buying your food and housing, you are in abject poverty, just that the system is propping up your survival for a while.
A lot of the US looks like they're doing great but fits into the category above.
Non-poverty would look like:
* You make enough money to pay for your own food, housing, and transportation in full, with enough buffer for emergencies, without needing to borrow a cent
* You make enough money to be on trajectory to save up to pay for your own food, housing, transportation, and medical expenses in retirement when you are physically unable to serve the workforce
> You make enough money to pay for your own food, housing, and transportation in full, with enough buffer for emergencies, without needing to borrow a cent
So you're saying I'm in poverty because I couldn't buy my house and my car outright?
> and medical expenses in retirement
You're saying I'm in poverty because I understand and intend to use Medicare?
These are trivially poor definitions.
> So you're saying I'm in poverty because I couldn't buy my house and my car outright?
I think this isn't as unreasonable as it seems to everyone living it. It's like water to the fish.
We are conditioned that everything should be fueled by more and more debt, and your dollars should constantly be devalued so you can't stop grinding.
The little people can never be allowed to just work enough to accumulate what they need and then take it easy.
Medicare is a different thing, the government should be providing medical care for everyone to begin with, regardless of what they make.
My definition is if you need to borrow money to put a roof over your head, at the minimum renting, you're in poverty. There are huge chunks of the US population borrowing money to pay for rent.
If your locality doesn't provide adequate public transit, then a car is a necessity, and the onus is now on the locality's economy to make sure everyone can access that; if your locality doesn't pay high enough to afford that car without borrowing money, then yes, you're in poverty. Alternatively, the locality can choose to provide adequate, safe public transit, and the bar of poverty would change.
Most of the US doesn't think this way because they're delusional and have been conditioned to feed the financial system and pay for things with money they don't have.
Mississippi, the poorest state, has similar median income to Germany. I’m pretty sure 50% of the people there are not in abject poverty.
Yes, but German society is structured to require much less energy, just as Dutch society is structured to use much less land.
If you put Germans whose lives function in a US-style, even just getting to work will be a huge drag.
Misery depends on the structure of society. Here in Sweden I can walk to work. This means that I'm spending zero money on travel to work, and that my travel to work contributes $0 to Swedish GDP. But this is actually better than if Swedish GDP were higher and I was traveling by car.
This is one way in which GDP can be extremely misleading.
Per Wikipedia, in 2018:
* Median household income in Mississippi: $44,717
* Median wage in Germany: €5,370 per month, equals $73,565.
So even the individual median wage in Germany is more than 50% higher than the median household income in Mississippi.
Sources: https://en.wikipedia.org/wiki/List_of_European_countries_by_... and https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...
This doesn't actually seem to be true based on a quick googling, i.e. Germany has somewhat higher median income.
But in addition to the raw numbers, you have to keep in mind that they don't account for cost of living and that different countries account for various services differently, especially health care.
Totally understand that; but it counters the assertion of “abject poverty”. Perhaps relative poverty is a better descriptor but abject poverty is someone living in cardboard tents by the riverbank. Regular poor is living in section eight housing or subsidized housing. I don’t think we have 50% of Mississippians living in abject poverty.
As a gulf state resident, a whole lot of us live in shitty old shotgun houses that have been patched up hundreds of times just waiting for the next hurricane to wipe us out finally.
I would assume this doesn't account for Germans having different healthcare costs which will aboslutely wreck the average American household with how fucked our system has become.
Okay and what exactly do you get for that income? What are the material outcomes for having a "higher" income than Germany? Because I know very few people that would openly choose to live in Mississippi versus Germany.
The GP claimed that 50% of the US lives in abject poverty. Mississippi our poorest state compares with Germany in terms of median income and Mississippi itself does not suffer from 50% rate of abject poverty. So by extension the US as a whole doesn’t suffer from a 50% rate of abject poverty (begging, trinket selling, selling off relatives, shitting in public, etc.) rates of abject poverty. That’s stuff you’d see in the Great Depression or Weimar Germany level stuff.
"Abject poverty" is currently defined as living on less that $3 a day and dealing with things like chronic hunger and exposure.
The best approximation would be the homeless population in the US (about 500k people), but even then most homeless would not even qualify.
"Half" is a gross exaggeration.
The homeless number under estimates people with unstable housing that aren’t on the streets.
I assure you that when your basic housing and nutrition are uncertain and missing even a few days of income will result in cascading effects of hunger and homelessness, the underlying stress is overwhelming.
It doesn’t have to be this way, we don’t let bullies steal all the toys on the playground and destroy the very ecosystem that they want to have fun in, why are we letting capital accumulate in the hands of the most effective capitalists at the risk of destroying the very markets that let them succeed.
I say that as a capitalist, if we lose the system because we allow unchecked Monopoly and wealth concentration, we won’t get it back.
I agree with all those things, but if we start making up numbers and definitions we're at risk of undoing actual progress.
Maybe it feels good to say "actually everyone is a victim of capitalism", but it muddies real necessary work when it comes to determining whether to prioritize how resources need to be allocated between a disabled person living on the streets vs a graduate student who is currently just a little underwater on their credit card payments.
What's your definition of "abject poverty"?
I find it hard to believe that half the US would meet the criteria for any reasonable definition.
The BLS and Federal Reserve both have data showing that the median American household has >$1,000 left over every month after all ordinary expenses, including housing, healthcare, and iPhones.
Any definition of "abject poverty" that includes a comfortable lifestyle and $12-15k excess income every year is not a serious definition.
>and half of the US is living in abject poverty
Source? All the ones I know of use questionable methodology like: "being able to afford a 2 bedroom apartment at median wage".
Out of curiosity, what is your expected baseline of what the average person and family in the US should be able to afford?
"should" is a pretty woolly concept. "should" we have to work at all? UBI proponents don't think so, and that apparently that has 45% support. What's hopefully obvious is that not being able to afford a 2 bedroom apartment at median wage is a far cry from "abject poverty".
https://www.pewresearch.org/short-reads/2020/08/19/more-amer...
I mean fair, but not relevant?
I'm asking you the question because a statement like 50% of [population] is making a claim to some notion of what they expect society to look like
you introduced the benchmark "not being able to afford a 2 bedroom apartment at median wage", though I would expect a modern day society that makes any claim to be wealthy to be able to have above 50% of it's population to be able to support something like that as that would indicate they can support a small family
You're saying that's not a good benchmark, so I'm trying to understand:
1) Do you have a different benchmark?
2) Is your key complaint that being unable to own a 2 bedroom house doesn't mean that individual or family is in "abject poverty"? In which case fair, though I would ask what does mean abject poverty for you?
It seems like you're saying 2, but I want to be sure
>In which case fair, though I would ask what does mean abject poverty for you?
The exact number is heavily contested[1], so I know better than to provide my own. That said, the official poverty lines are a pretty good place to start, and it's pretty safe to say is that whatever the line for "abject poverty" actually is, "2 bedroom apartment on 1 person income" is pretty far away from that. That claim doesn't require me to provide a specific poverty line.
[1] https://en.wikipedia.org/wiki/Poverty_in_the_United_States#M...
> All the ones I know of use questionable methodology like: "being able to afford a 2 bedroom apartment at median wage".
Well, that's (at minimum) what you need to raise a family and replace yourself in the labor pool.
In addition to that being obviously different from the line to “abject poverty”, it’s not at all obvious that a single median income should be able to support a 4-person family in a 2BR apartment or else the system is completely broken…
That's a laudable goal, but hardly "abject poverty"
In the 1950s Americans were doing a good job at replacing themselves in the labor pool, and household size was larger and houses were smaller.
Why is it impossible for Americans to live with 300 sq ft per person like baby boomers did as kids, but now we must live with 600+ sq ft per person?
The poverty rate in the US is 10%.
https://www.census.gov/library/publications/2025/demo/p60-28...
> half of the US is living in abject poverty while quality of life for everyone is decreasing.
The 350 million Americans looking at the top of the US economy and crying need to turn around and take a look at what's behind them.
There are something like 7 billion people behind them, worse off.
It can be both. Look at the stress hormones people live with. Look at other stats like rising infant mortality, dropping IQ etc.
> Look at the stress hormones people live with.
https://research.senedd.wales/research-articles/poverty-and-...
Does being poor cause mental health issues, or are mental heath issues a cause of poverty... The answer here clearly better access (read free) to mental heath care, and it wont have the impact one would think (see the UK data).
> Look at other stats like rising infant mortality
You mean the attributions tied directly to maternal complications: https://www.cdc.gov/nchs/data/vsrr/vsrr033.pdf
The thing is we changed how we collect this data, to something that would be considered bad: https://www.washingtonpost.com/health/2024/03/13/maternal-mo... - There are tons of criticism on how we collect this data, they are valid, if you dont like this source, find another its a mess of our own creation.
> dropping IQ etc.
The largest root cause is that people spend too much time on their cell phone dumbing themselves down. Think about that one... no one feels the need to elevate themselves, they are happy to spend time on what amounts to leisure. Would you have sympathy for the person who gets fired cause they chose to play 18 holes of golf 5 days a week rather than do their job?
"Listen folks, it's no big deal if you can't afford rent or to purchase a house. Ignore my vacation homes in Aspen, Jackson Hole and Nantucket. Just think about how much better you have it than the people in Haiti and get back to work!"
> purchase a house.
This is a functionaly unmovable number. https://fred.stlouisfed.org/series/RHORUSQ156N
> you can't afford rent
Because we as a society have drastically changed how we use housing: https://www.census.gov/library/stories/2023/06/more-than-a-q... -- Multi generational housing was a thing. Having roommates was a thing... the premise of "golden girls" would be lost to a modern audience, because cohabitation is dead. The premise of "bosom buddies" would get canceled for its insensitivity, but no one would understand because boarding houses are all but gone.
Building every one in the world an American style house, would cripple the globe. Concrete, Sand, Copper, Wood are going to become massive problems long before we get close to getting the job done.
> Ignore my vacation homes in Aspen, Jackson Hole and Nantucket.
You think that vacation homes are causing the housing crisis? Are eroding wages elsewhere? The industry of these locations is TOURISM, and a fair bit of it is international. (Not Nantucket).
It's not like whaling is going to make a comeback to make Nantucket a viable place to live again.
> Just think about how much better you have it than the people in Haiti and get back to work!"
Plenty of Americans look at musk and say "lets eat the rich" ... the problem is that the rest of the world has those same hungry eyes for us.
This isn't relevant to this discussion. You're welcome to go complain on a message board in Mumbai about wages in the US.
It absolutely is relevant to the discussion. Many Americans are ungrateful and envious of the Americans wealthier than them, in spite of the fact that their own living standards are still far far better than the majority of humans on the planet. And some of those hypocritically think that the wealth of richer Americans belong to them, but would never consider giving their own wealth to people across the globe who are poorer than them.
The people who want money from people richer than them never want to give up their own to the people who look to them with the same eyes.
> half of the US is living in abject poverty
Anyone who believes this has absolutely no concept of what abject poverty looks like.
If you’re only complaint is the word “abject”, I encourage you to try to live on anywhere from $7 to $15 an hour, in a part-time job that doesn’t guarantee week to week how many hours you’ll get.
That is a very common reality.
My room mates all lived on slightly above minimum wage with part time hours. They were not in abject poverty. They were just plain poor. They still had cars, phones, video games, food, water, shelter. They each had an ACA plan heavily subsidized and probably were eligible for other welfare but didn’t use it as far as I am aware.
This is quickly going to devolve into 'nobody suffers unless their suffering as at least as bad as the worst suffering that exists', so let's just go ahead and get that out of the way and move on to something less pointless.
GP could have just said "poverty" and the vast majority of unconstructive discussion that has followed could have been avoided.
Instead they said "abject poverty" as an emotional emphasizer, and people rightly called them out.
It's not about being pointless, it's just plain wrong.
The median (not average) household income in the US is 80K USD. p25 is 40K. p10 is 20K. They're struggling, sure.
But I wouldn't call that abject poverty.
> But I wouldn't call that abject poverty.
But you could. There is no law of the universe that is going to stop you. Words are something randomly made up by humans.
> it's just plain wrong.
Again, words are completely made up, so it can't really be wrong in the traditional mathematical sense. It could be misinterpreted, perhaps. Of course that is dependent on how you've chosen to randomly make up "wrong".
Have you looked up the definition of abject poverty? It is "the most severe and hopeless form of human deprivation". It's the subject of the conversation, how is that pointless?
While you are able to look up someone's definition of abject poverty, the only definition that is relevant in this context is the one held by the author of the earlier comment. It is unlikely you can look up his definition (before he replies to those who have asked for the definition in force).
> the only definition that is relevant in this context is the one held by the author of the earlier comment.
This is absolute nonsense. We use common language to refer to common things in understandable ways in order to communicate with each other. You don't get to just handwave baldly incorrect statements as "well maybe he just has a different personal definition" without basically rendering literally all conversation moot and pointless.
"Yeah, I know he said 2+2 is 5, but you don't know he defines 5" is just as patently silly.
> We use common language to refer to common things in understandable ways in order to communicate with each other.
Common doesn't mean ever-present. In practice, it is impossible for everyone to converge on a shared understanding for all terms. There are provably many people in the world who have never even heard the term "abject poverty" before. They cannot possibly understand what the term means to you. Fundamentally, "abject poverty" can only mean in that comment what the author believes it means. That may overlap with your understanding, but it also may not. We can also prove that he is not a mind reader and thus cannot tune it to your understanding. He is limited to his understanding and his understanding alone.
A good faith actor who believes there may be a discrepancy in understanding will seek clarification. That is what a discussion forum is all about. If one does not want to participate in discussion, why be here?
[Citation needed]
dozerly. "We have one of the worlds most prosperous economies, and half of the US is living in abject poverty while quality of life for everyone is decreasing." Hacker News, 30 Jun. 2026, https://news.ycombinator.com/item?id=48734916
the top 1% have nearly as much income as the bottom 80%
https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
>the top 1% have nearly as much income as the bottom 80%
>link for "Distribution of Household Wealth in the U.S. since 1989"
income =/= wealth
I don’t think that makes the argument you think it does. Wealth concentration is even more extreme.
The point is that his original claim is either incorrect, or is not supported by the source he cited.
The linked view of the chart is distributed by income percentile, the title is "Wealth by income percentile"
>The linked view of the chart is distributed by income percentile, the title is "Wealth by income percentile"
That's still measuring wealth, not income. The correct statement to draw from the chart is that top 1% by income have nearly as much wealth as the bottom 80%.
It's amazing how few people are willing to admit there is a problem. Spend 45 minutes driving around the state I live in talking to random people and it's painfuly obvious this is reality that some. I suppose it's mostly epstein sympathizers who are pushing the narrative that everything is perfect and nothing needs to be done.
>the amount of labor being generated per person has not really changed, but the overall pie has grown massively around us
I don't see where the article made that claim. Are you making it yourself and can you support it? That sounds like something that would happen when technology improves. What the article does do, is pose a question that it never answers: "When the labor share falls, it means that productivity, prices, or both [which?] are growing faster than wages."
The Fed tracks this: https://fred.stlouisfed.org/graph/?g=tjto
Unit cost on labor has increased at a more or less steady pace this whole time. Ergo, it's not so much that labor is decreasing as other things are increasing faster.
It's hard to argue that technology is increasing labor productivity an order of magnitude faster than it was in the 50s. It's more likely something else in the dataset (returns on capital/rent) is exploding in value.
>the amount of labor being generated per person has not really changed
im not really understanding what you mean. i dont get how labor is generated, in particular. do you mean to say the amount of total hours dedicated to labor per person or something else?
he's referring to labor productivity, e.g., the economic value produced per unit of labor input. it also _has_ changed significantly, as seen here: https://fred.stlouisfed.org/series/OPHNFB
however, unit labor costs has also been increasing (although they remain variable): https://www.bls.gov/opub/ted/2026/productivity-up-0-3-percen...
Probably to referring to hours worked, eg. https://fred.stlouisfed.org/series/AWHAETP
no, he's almost certainly referring to labor productivity. https://fred.stlouisfed.org/series/OPHNFB
I don't know which people you're referring to, but the conclusion is pretty clear: the _share_ of the total pie captured by labor is shrinking. Productivity is increasing, but capital is capturing all, or almost all, the benefits of that increased productivity and economic growth.
AI is going to further exacerbate this inequality.
Time to re-read Capital In the 21st Century.
It's just rent.
Rent for the homes we live in (including "rent" as mortgage payments to the bank)
Rent passed through as costs to the consumer for the businesses we patronize.
We're stuck at home more affording to be able to do less so the people who own don't have to work.
I have a similar PoV. I think rent seeking without sufficient checks is one of the biggest problems in our economy.
But the underlying problem that people aren't paid enough is still true. Outside a few fields, most people are underpaid. It's even more stark when measured against productivity increases during the same time periods. That wealth went somewhere. It wasn't to most people.
People have a tendency to get upset when they realize these kinds of things.
From outside it doesn't look like not being paid enough. It looks like affordability problem. Prices in general are too high.
Rents in general are part of this. Both for housing and commercial property. Somehow getting profit from both rent and appreciation is the goal of the system.
Well that is what population voted for and choose not to overthrow system for so maybe they deserve it.
Underlying rent are other things going up - property taxes, input costs like labor and materials, and insurance.
While we must be mindful of greed and abuse, we need to include all underlying costs before just assuming people are cranking up rents. I'm not a landlord but I own property and the costs are gotten vicious lately. Labor is expensive, materials are insane, energy costs, and now insurance are suffocating. And in states with high property taxes, watch out.
Energy is one variable. But have things gotten less efficient as things keep going up in prices? Is more labour needed to produce the same? There is stuff like regulation forcing more expensive things. But in general if there was efficiency gains things should keep the same price or drop. Somehow this isn't really happening very well.
But my thesis really is that these things are not underlying the rents. But rents are actually underlying these costs. And well in general the rent seeking economic process build on ever growing valuations of everything.
Restaurant operations is one of the places where it's most clear the rent is the biggest problem.
You can say restaurant workers need to be paid more, and ok sure, but where is that money coming from? You pay labor, food suppliers, rent, utilities, taxes, and... where exactly is the money to pay workers more coming from?
With the number of empty storefronts in my city (not to mention restaurant closures) it's clear owners aren't making money hand over fist or there would be many more restaurants.
Restaurant workers in my experience are more likely to go to more restaurants and they can't because... their rent is too high and the price of food at restaurants is too high.
The common denominator with all of it is money being sucked away from people doing work and people hiring work by... rent seekers.
The "labor share of income" is exactly this. How much money is getting sucked out of the rest of the economy to prop up the do-nothing class. Retired people whose retirement investment was selling a house for much more labor than they bought it for and real estate owners doing as little as they can to maximize income they aren't earning.
Indeed. It's a game of monopoly where one person owns all the property, and everyone else is just rolling the dice and, paying rent every turn.
And it's wild to me how we can't seem to figure out how to bring the cost for this down. Building affordable houses should be our no. 1 priority.
If you build plenty of houses, they become affordable. The latest Affordable Housing is mostly gov-enabled scams, at least in San Diego. They are being made for greater costs than the luxury housing since the funding is guaranteed. Then the same developers are incentivized to keep all rates high by building less.
https://sdhc.org/wp-content/uploads/2025/04/107_Workshop_RAN...
I don't want affordable housing mandated, I want the opposite. Force builders to build 1500 sq ft three bedroom apartments. Flood the market at the top end with SPACE and then tax vacancies of these spaces aggressively.
This sets a price cap, makes these high density spaces affordable for people who want to live their whole lives there and not just their single 20's, brings diversity into communities and drops the floor out of the prices on these single occupancy closets going for $2000 per month.
Just tax corporate owned vacancy. In a slump there will be apartment buildings that are mostly empty because they refuse to lower the rent as lowering rent triggers property re-valuation.
Office buildings sit mostly empty for the same reason.
Tax the owners to punish the bad bets and eternal growth expectations of banks to force them to use the space to the benefit of the community or be forced to sell when they run out of money. Use zoning laws to prevent the destruction of units to avoid taxes.
repeated efforts to develop "dwelling units" on a large scale have collapsed in corruption. There are financial players who are very aware that there are vast amounts of monthly monies at play. This is not unique to the USA in fact it is a repeated theme in the capital economies.
The US Federal Housing and Urban Development Department was intimately involved in the Savings and Loan collapse of the late 1980s. It was punted around and repeated in the 1990s, but the stock market gains of the late 1990s diluted the news in public. That phase culminated with a dot-com bubble collapse and ultimately, the 2007 dollar credit crisis. Leveraged purchases of real estate were part of that financial soup. Many of the players from that time were "boomers" and their seniors, so living memory of those circumstances are now fading. There are many, many non-fiction books about these topics.
Since 2000 the biggest economic change is software. While most workers doing physical jobs have only made themselves slightly more efficient (or maybe mass immigration has maybe even reduced efficiency in some sectors), some workers (tech workers) have made themselves hundreds or thousands of times more efficient and captured the gains as equity (either in their own startup, their job, etc...). The positive is that growth overall has still lifted living the average living standard.
Benn Jordan just released a new video proposing that we are not in “late stage capitalism” and instead we are currently an offshoot of capitalism called “leverageism”.
In the video he describes how when people like Elon Musk get to the level of wealth that they are at, it becomes far more beneficial for them to take from (or stunt) the spending power of lower classes than it is to add to their own net worth dollar figure - simply put, the former moves the needle far more in their favor than the latter.
Definitely explained the idea of our slice remaining the same while the overall pie around us is getting larger.
*Edit: Benn not Ben
FTA's conclusion:
"Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. <later> ... and they provide little evidence that it will evolve differently from past episodes."
This conclusion seems to be against "this time is different" arguments. Should we be generally encouraged by similarity to past declines pre-2000 or bearish and think that there is more drop to come like the 2000-2007 and 2007-2019 periods they graph out?
I guess there is no way to predict other than check back in after time passes.
> I guess there is no way to predict other than check back in after time passes.
Welcome to the dismal science of economics, where the rear-view mirror is crystal clear but the windshield is totally fogged up.
Bearish, they are already working as hard as they can to replace everyone with AI or at least Actual Indians playing AI
The submitted title is a bit sensationalist given the article’s conclusion:
> Is this decline a distinct change from the recent behavior of the labor share in the U.S.? Along the two key dimensions we investigate, our answer is no. First, the labor share’s trajectory post-COVID broadly follows the cyclical patterns observed in earlier recessions, with a decline during the recovery phase that mirrors historical dynamics. Second, the decline in the labor share since COVID is driven primarily by within-industry changes rather than shifts in economic activity across sectors. Taken together, these results suggest that the post-COVID decline follows the same cyclical patterns as earlier recessions and is driven by the same within-industry forces, and they provide little evidence that it will evolve differently from past episodes.
What I find more interesting is the sharp drop around the early 2000s
I don't think so. Opening sentence is this:
> The labor share of income in the U.S. is currently at its lowest-ever level in the post-war period.
Agreed on the 2000 drop though. Would be interesting to read a retrospective on that.
Is it not the dot com bubble pop?
Or the world trade center?
That most-recent spike during/post-COVID really puts into perspective just how unreasonable low-wage employers were to be so hysterical.
Capital be praised that capital owners are back on top.
May the low-waged ever be trodden upon and forever know their true place.
Those that died or became disabled during covid are mewling degenerates.
Their cries of 'illness', 'poverty', and 'homelessness' are precisely as useless as the wailing and lamentation of women in their menses, a farcical thing to be dismissed and ignored.
May the Fed be ever in your favor, Amen
Highly suggest adding "hysterical" to your internal vocabulary filter.
Not OP. But respectfully disagree. Reads appropriate to me.
"Related to or marked by Hysteria" https://www.merriam-webster.com/dictionary/hysterical
Hysteria being "behavior exhibiting overwhelming or unmanageable fear or emotional excess" which seems to be exactly what OP was trying to say.
The origin of the word is a bit darker than its meaning, unfortunately. It comes from the Greek word for Uterus. You can kinda fill in the blanks from there as to how it came to its modern meaning.
virtue signaling of the highest degree.
Nah, I don't care either way. Just explaining to the person why the definition isn't the whole story.
> The origin of the word is a bit darker than its meaning, unfortunately.
We should all just stop speaking. The origin of too many words is problematic. Just think of how many were coined by racists and misogynists!
Nah, that's knee-jerk. Don't have a particular horse in this race, just explaining why some people might react this way to the word if they're aware of the history behind it. We as a society can determine whether or not we like certain words in our vernacular.
My point is: who cares about the origin of the word? IMHO, no one should. Unless the word used in a way meant to offend, it's fine. Otherwise you're kind of cultivating offense and over-sensitivity, helping it survive and grow, which helps no one.
It's trickier than that. There's a lot of people who are naturally aware of the history behind the word, and it's tough to remove emotion and intent from that history. Sometimes things bother people, and it's nice to understand why before deciding if you should do anything about it or not.
Let's add dumb, lame, sinister, grandfathered in while we're at it if we're litigating roots nobody thinks about on a day-to-day basis...
it feels like every share of income is at its lowest except for the ultra wealthy.
It's not necessarily limited to the ultra wealthy, but outside of a few key areas (as someone mentions, those profiting off of the inflationary spike, those in the real estate market, etc) it is more or less the case, yes.
It's not, you're just hanging around the wrong people (or spending too much time on social media comment sections).
How do you know that you're not the one hanging around the "wrong people" to know better? You could just as easily be surrounding yourself with wealthy people as they could be with non-wealthy.
Without data, it just sounds like "my social circle is more indicative of reality than yours". Maybe it is! But maybe not, so it's not particularly convincing
I'm not the only one with access to data though, if you're wanting to hold to your beliefs unless someone does the legwork for you and attempts to force it on you, I think your bias will overcome. Here is a source to begin anyway.
The middle class (especially upper middle) saw their share of income drop, but the bottom 50% increased.
https://equitablegrowth.org/u-s-income-data-for-2024-shows-t...
Talk about missing the forest for the trees. The bottom 50% saw a 0.2% increase (to just 21%) over 5 years. OK, this is technically more, but it is a paltry increase of a tiny base spread out across so many people. It is reasonably seemingly imperceivable to any individual in the group. The top 10%'s increase, on the other hand, was greater than this. A greater percentage increase on a slice of pie that was almost twice as big. In the larger context, this just shows greater inequality.
If people are saying they feel the squeeze, even in social media comments, they are probably being honest.
Data is the answer, it's just that so few people are willing to look at unbiased data. Although the start is asking a more measurable question.
some maybe-biased data for a steel man in [1]:
"The Census Bureau measure overstates current income inequality between the highest and lowest 20% of earners by more than 300% and claims that income inequality has risen by 21% since 1967, when in fact it has fallen by 3% ... In 2017, among working-age households, the bottom 20% earned only $6,941 on average, and only 36% were employed. But after transfer payments and taxes, those households had an average income of $48,806. The average working-age household in the second quintile earned $31,811 and 85% of them were employed. But after transfers and taxes, they had income of $50,492, a mere 3.5% more than the bottom quintile."
[1] https://www.wsj.com/opinion/income-equality-not-inequality-i...
Data is also a really, really potent rhetorical tool, because it is definitionally never complete (a map that fully captures a territory is the territory), and by those omissions, the data can be made to say anything at all in a way that looks unbiased.
What's the question I should be asking, and what data answers it? I'm genuinely asking
Not you particularly, I meant the original: "it feels like every share of income is at its lowest except for the ultra wealthy."
It's ambiguous in several way, no time scale, "ultra wealthy" isn't defined, and "income" somewhat ambiguous.
Median household income is the stat usually used to measure income and it's still increasing.
If my income goes up by 1% and my expenses go up by 2%, has my financial situation improved?
Source for this statistically?
https://equitablegrowth.org/u-s-income-data-for-2024-shows-t...
Bottom 50% is increasing income with the top 10%, it's the middle class that's declining in the last 5 years. This was a quick google search, so I'll ask you to provide a source that's contrary else your comment was purely rhetorical and made in bad faith.
Well I would implore you to read your own source. And maybe start hanging around groups that read more
There is but you have to ignore the lived reality that Americans are struggling to afford healthcare, housing, utilities, education, and food costs all while the ultra wealthy are demanding the public invests trillions into vaporware.
maybe the disconnect here is the claim was about 'income' which in isolation of living conditions, perhaps continues to rise and thus by the most narrow and useless definition, the OP is incorrect
Things barely increasing after nearly 40+ years of being completely flat isn't the win that poster thinks it is, maybe if you're doped up on neoliberalism it sounds nice but everything else people need to survive are also increasing in costs massively.
It’s not. There are plenty of non-wealthy people who make money from things other than their labor.
Small-time landlords are an example, as would be anyone who owns a small business and draws cash from profits rather than taking a salary.
> non-wealthy
> landlord
If you think these two things are compatible you need to talk to more people outside of your bubble.
Not American here. I know a couple of people who took out a second mortgage to buy a small appartement to rent out when mortgages rates were at 1%. They probably have €300k in equity in both the primary and secondary home. And around €600 in income from the rental. I do not consider that wealthy.
I would describe that as having invested in an appreciating asset (like stocks), and their main income comes from the gains of the property prices as they go up in value. Moreover, they leveraged themselves via loans to acquire income even faster.
These gains might be realized at any point if they're willing to pay taxes for them.
Having lots of money but choosing not to spend it doesn't make you any less wealthy.
Most landlords are leveraged up to the hilt. They may look wealthy from the outside but a close look at the figures says otherwise.
The original comment said "ultra wealthy".
You don't have to be especially wealthy to own a second house and rent it out. That isn't poor, certainly, but I wouldn't call it wealthy either.
The annoying/sad/infuriating thing is the ultra wealthy don’t have “income.” Technically, according to IRS rules, much of what they experience (housing, food, etc) should be classified as income. But their lawyers and accountants help them keep that looking quite low.
This report is only about wages, so even if the ultra-wealthy reported their real sources of income, they wouldn’t shut up as “labor” the way this defines it.
Capital gains not being considered earned income is simply sensible use of terminology to categorize different ways of amassing purchasing power. For example, in order to carry out the linked analysis.
It has nothing to do with the IRS or taxes.
Income goes straight to a person, capital gains is a little return from other people generating income. Basically a MLM lol.
even with this scam the top 1% of earners still have more annual income than ~75% of the population
I used to think this - but when I talked to a tax lawyer friend and we walked through the steps they take, usually they're just deferring taxation that does end up getting paid by an entity eventually.
Capital gains tax is clearly lower than income tax. So why did you change your mind?
Not the commenter you replied to, but one thing to note is that capital gains tax (at least in the context of investments in corporate equities) is applied after corporate taxes. Profits and reinvested earnings are taxed as profits, and they're two of the key components to valuing an equity.
As such, when comparing income tax and capital gains, you should add the impact of corporate taxes. Incidentally, corporate taxes are why many small business owners pay themselves wage income, rather than doing stock buybacks or dividends.
> Incidentally, corporate taxes are why many small business owners pay themselves wage income, rather than doing stock buybacks or dividends.
You've been sold some BS. Usually this is because you're required to take a "reasonable" wage for your role in a company. Otherwise I guarantee you every independent contractor out there (among others) would be operating in a way that made 100% of their income business profit, rather than wages, as it has enormous tax advantages. Approximately everybody tries to find out the least they can take as wage income without pissing off the IRS, and sets their "wage" to whatever that is.
Many locales have laws that do not allow remuneration above the 'reasonable wage', to prevent tax circumvention by having employers spread wage payments across multiple family members of employees, but I am not familiar with any jurisdiction with a minimum reasonable wage law or regulation. Could you please link some source for the claim that business owners are required to accept a 'reasonable wage'?
I've often wondered why we don't abolish corporation tax and instead tax capital gains and dividends like normal income.
Because capital gains taxes really discourage selling which gums up the economy
This would be my personal preference, as I believe that voters often overlook the impact of corporate taxes, and there are just too many (different) taxes.
So if I buy and sell Pokeman cards I shouldn't have to pay any tax because WotC pays corporate taxes?
I am not saying that one party paying taxes means that no counter-party should. I am just saying that the impact of different structures should be accounted for.
If the income was earned through dividends, maybe this would be a reasonable argument. Most of the time stock just gets bought and sold by investors rather than the company itself though, so it's not clear why corporate tax would have anything to do with this.
Sure, the stock price should somehow be tied to the actual value of the company, but for a while now it's been mostly indistinguishable from a Ponzi scheme other than a few companies that do sometimes decide to buy back some stock, which makes it slightly less sketchy but if the value is from the company buying it back, it's a lot closer to debt or a bond, which is not at all how anyone treats it.
I agree that in a bull market, many corporations are not purchased and sold at book value. That said, we are on the largest bull-run in history, so we shouldn’t treat this as the norm, and base all our long-term decisions on the current situation.
If they donate the wealth to their own foundation to continue to hold close and control, it doesn't get taxed. If they borrow against the wealth at low interest rates until they die and the basis is stepped up ("buy, borrow, die"), it doesn't get taxed. Certainly, deferment is a component, but there are obvious examples of the very wealthy operating in a manner to avoid taxes entirely when they're able to (realizing the benefit of the wealth without having to realize a taxable event). Trust stacking is a recent fad as well, although I don't have enough data to say whether it is a material concern from a tax revenue perspective.
Silicon Valley Is Obsessed with 'Trust Stacking,' and the IRS Doesn't Like It - https://news.ycombinator.com/item?id=48727963 - June 2026
The cases you're talking about are all delaying taxation, not eliminating it. Eventually someone has to draw that wealth - the foundation has to spend for public benefit to be eligible for 501(c)3 status, for instance.
How Elon Musk's secretive foundation hands out his billions - https://www.theguardian.com/technology/2019/jan/23/how-elon-... - January 23rd, 2019
"Spending for the public benefit" has a lot of latitude.
I also don't think they addressed how borrowing against the wealth doesn't require any immediate taxes (and is often low interest, given how being a billionare means you get more favorable terms). There's nothing stopping someone in that position from just deferring taxes on the money they currently have, borrowing against it, and then investing that to turn into more money with taxes deferred even further so that they can use the proceeds to pay the previous deferred taxes and keep the difference.
That requires their investments to keep going up in value. That doesn't last forever, the assets that people borrow against eventually need to be sold to pay back that loan. When they sell to make payments, those are taxable events.
How does it work if the loan defaults and those assets were used as collateral?
If any significant part of that article is true, I see self dealing that would already be against IRS code. It's just a matter of enforcement. We often already have the laws to solve the problems we identify.
Was your ‘friend’ Jeffery Epstein?
Not at all. The real estate share of income is probably at its highest among a lot of people who belong to the non-labouring class, but are far from ultra wealthy. But it's nice to have a scapegoat, isn't it?
If you belong to the 'non-laboring class' you are by definition the ultra wealthy. It's wild how much people are willing to slide goalposts to make themselves feel better.
It hurts the definition of the words when you use ultra wealthy to refer to the top 50%...
You think 50% of people don't labor?
While about 50% to 60% of the adult U.S. population are active W-2 wage earners at any given time, the percentage that relies on labor exclusively (meaning they have zero capital income or assets to fall back on) sits right around 40% to 50% of working households.
Ultra wealthy literally means "beyond wealthy". A double digit percentage of the population, maybe 30-50% belong to the non-laboring class.
If I was talking about "ultra obese" people, you wouldn't assume I was talking about everybody who has a couple of extra pounds?
For what its worth Ross Perot had an ominous take on the effects of free trade back in the 90s with his "giant sucking sound" observation.
The root of this started in the 70s as the New Deal coalition decayed and Keynesian economic theory fell out of favor among the elites.
To be fair their were good reasons at the time to think it wasn't working either.
Worth noting that the Bretton Woods system was -not- quite what Keynes wanted...
No, yea that's fair. I think he'd be even more confounded about the current state of affairs though. Just my read.
Obviously the solution here is for workers to also become shareholders.
The US has historically been quite opposed to the workers becoming shareholders.
Except for all the companies that issue shares and options as part of employee compensation.
this is mostly in tech. starbucks barista is not going to get any stocks
Starbucks sells its stock to its baristas at a 5% discount every 90 days through payroll deductions.
https://www.starbucksbenefits.com/en-us/home/stock-savings/s...
The barista can buy $SBUX every payday. The inverse of sell on vest.
More accurate to say that the US has been opposed to workers controlling the firms they work for. But the capitalists dangling just enough of a morsel to get the workers to dance 80 hours a week, but without the ability to actually control anything, and without majorly diluting? Chef's kiss.
None of those gives voting shares to employees.
Every share is a voting share. There are a small number of weird cases (e.g. Meta super-voting shares limited to Zuck), but your statement is broadly false.
Even if true, why would that matter? This is about distribution of wealth, not additional responsibilities.
isn't this the expected/intended outcome of the economic policy we've held for a generation or two?
the capital/labor class gap increases when total returns on capital investment exceed total wages+redistribution to the labor class, and the gap shrinks when that's reversed. the market ~controls the capital gains and labor wages knobs, and society decides where to set the redistribution knob.
the article investigating the post-covid drop and concluding that it's normal is an interesting rhetorical device. on one hand, relief that nothing crazy is happening. on the other hand, disappointment that we've accepted a growing inequality gap as normal. the gap was already at a post-war max going into covid, the floor gave out 20 years earlier and covid was just gas on the fire.
advancements in automation and tax codes that benefit capex over payroll will continue to incentivize business to shift budgets from labor to robots.
Interesting that most of the decline happened in the 2000s. The graph shows a large decline from ~2000 to ~2008 which continues after the GFC before going up a bit in the 2010s. The drop off since COVID is comparatively small.
Are there hollistic analysis? I generate income with my labor, but I also save in retirement and investment accounts. On analysis like this that we typically see, are these two things competing? Are we really just seeing a rise in retirement savings?
I think this is part of a long term development where technology and globalization slowly erode workers bargaining power. Basically you only build a factory in the US if you can keep labour costs low enough and the manufacturing automated enough so that you can still compete with other manufacturing hubs.
The longer graph (starting at 1947) shows the shift in 2001 on more startlingly
https://fred.stlouisfed.org/series/PRS85006173
Corporate profit vs Labor income divergence (only up to 2018)
https://fredblog.stlouisfed.org/2018/08/corporate-profits-ve...
Fascinating. The 2001 shift aligns well with China's entry into the WTO.
Other countries in the world have manage to keep workers bargaining power in the face of globalization and technological progress.
I think in the case of US literally killing workers and union people is a huge part of why US workers lack power and why US unions are so impotent.[0]
[0] see Battle of Blair Mountain and what work Pinkerton mainly did from its founding to WW2, as examples.
> Other countries in the world have manage to keep workers bargaining power
Such as? They might have managed to maintain it for privileged subgroups of the workforce but not for the average worker.
I don't have time for a longer comment, but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates. The doctor, lawyer, financial advisor, CPA etc. that in past decades would have had his/her income run through a W2 arrangement shifted to becoming a one-person corporation
Do you have any evidence for this, at all?
Sure
https://www.brookings.edu/wp-content/uploads/2016/07/2013b_e... https://home.treasury.gov/system/files/131/wp-107.pdf https://eml.berkeley.edu/~yagan/LaborShare.pdf
Thanks very much for providing those sources.
That said, it's a huge pet peeve of mine when someone makes a statement, and then provides sources to back up that statement, but the actual sources contradict their original statement.
You stated "but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates." But then your very first linked article states "First, about a third of the decline in the published labor share appears to be an artifact of statistical procedures used to impute the labor income of the self-employed that underlies the headline measure."
I think there is a huge difference between 1/3 (while still a lot and an important factor) and what you wrote, "mostly a statistical illusion", especially since other substantial factors proposed in that article are things like offshoring.
They seem to conveniently not have enough time to provide that in the comment
Sure matches my anecdotal experience.
How much of an effect it has at the national statistical level I'm not sure.
Exactly. Crazy you are getting downvoted for having the most informed comment here. The other aspect of this is the rise of franchisees in America. Previously, the salary of the manager of a corporate store would be measured as labor income. In a franchise, it would be measured as capital income.
https://bfi.uchicago.edu/insight/research-summary/the-rise-o...
Okay, so say AI & MBAs are successful in replacing the labor spend of corporations on every level? What happens to "the economy"?
It transitions back to a more feudalist state. The series finale to "you will own nothing and be happy."
That is, if they're successful.
Is there any reason to believe they won't be?
The sheer number of people who would have nothing left to lose would probably fight back, literally, at that point.
People tend to get excited when they can't eat and despite its timidity America is exceptionally well-armed. That sounds cute in a post drone strike world, but if the government attacks its own citizens like that, they'll have a hell of a time defending that position to the rest of the world. Humanity is usually slow on the uptake but eventually settles on "how about you just go fuck yourself" even if the party takes a sec to get going.
Who knows. I think it's better to err on the side of optimism despite the grim outlook.
That has already happened. The entire industrialized world is feudal. Young workers who are experts in their fields working full time can't afford a simple home. Young business owners who employ several people full time can't afford a simple home.
Not much. Early economies relied on mutual trade. I give you X and in return you give me Y. Soon we realized that you cannot always give Y in return immediately, so we invented accounting to keep track of your promise to give me Y at some point in the future. As time went by eventually we stopped caring about getting Y back in return and started taking an interest in collecting the promises themselves (i.e. profit).
Why would someone want to collect promises? That seems rather silly, right? What having a lot of promises gives you is social standing. People treat you differently — better — when they give you their promises. If traditional labor goes away, the economy simply becomes you promising to hold those who have things in the highest regard; to be there as their friend when they call for you to. That is the same modern economy we already have but with less steps.
Because labors in China are extremely cheap. And they are getting cheaper and cheaper in last decade, despite the GDP growth.
As a hardware founder, I’ve seen the opposite until very recently. Labor cost has been going up much faster than inflation, at lease in hardware assembly.
Do you have a source?
According to the article, automation (including software) and other technology "advancements" are important factors.
I think it's becoming clear that we are reaching a point where UBI must be debated in Congress subsidized by something that doesn't wreck economic growth and probably doesn't target capital investment.
What happens if large cohort of Boomers retires and stop working, instead living on their savings? Labor share of income drops. If you remove this effect, the labor share of income is flat - confirmed by last week's analysis in The Economist.
Pertinent data: https://fred.stlouisfed.org/series/SPPOP65UPTOZSUSA
Equity should be a normal part of compensation for non-executive employees in addition to their wage/salary and benefits.
There's nothing about being in the C-suite that magically endows one with motivation based upon stock price, but we pretend that there is.
Yikes. Good to know that labor shares used to rebound after crises, but since the 2000s and the dotcom bubble it has basically been downhill only. So don't expect any of this to get better unless we roll back technology to the last millenium.
It's not the tech but who sees the benefits. The issue at play is the monopolization and concentration of power.
Ie, why can one guy who is insanely wealthy due to stock valuations take loans against that to pull various levers of power. We didn't elect him, we need a way to control that outsized influence.
Not technology - that's only downstream of politics.
No political administration in my lifetime (!) has made policy decisions against the interests of tech monopolists. The closest we got was Lina Kahn's FTC.
Technology isn't the problem. The problem is the generation in governing power through the last 2 decades has no problem burning down the country's future to maintain lavish retirement funds for themselves.
I think it's more nuanced than that. There surely are plenty of cases where that is the case, but it's also a natural effect of hyperfinancialization, which many really do believe to be a "net positive" for the stability it brings. There's also the natural tendency of consolidation and centralization of power, and the natural counter-balance to that has been suppressed. Then you have legislative incompetence, the general failings of scientific governance aggregating over time, and many other structural flaws that are deeply seated and long-running.
We shouldn't just be pointing at the (very much real) stupid greed, there are many rotten components occurring simultaneously.
Could it be because the productivity is up?
The most interesting takeaway I see in the labor share percentage graph is the trend that labor share increases into the recession. Post recession share trends down for a bit.
How much of the trend is due to employment trends vs. printing money for the wealthy to get their hands on it first(and profit) post recession?
By design, no?
Yes by design. Basically just by designating one part of the economy as non-productive consumption economy, and the other part as production economy, they create the justification for inflation - so that the government can have free money and take it from the stupid consumers by decreasing their wealth a little every year should they choose not to spend it, and give it (sorry, invest) to the nice productive entrepreneurial capitalist part of enconomy who will somehow reinvest it allegedly (read: mostly buy up shit the former half needs and sell it back to them at markup), the system has a direct wealth transfer mechanism that points from the poor to the rich, it couldn't be any more shameless and obvious if they tried.
I wonder if labor itself will become an anachronism in the age of AI. Perhaps the future economic landscape will be dominated by capital because everyone will own capital. You will command a small army of agents to do whatever you want. You will no longer need to work for someone. You own small businesses far more than you could possibly operate in the pre-AI era and they will mostly operate autonomously with minimal direction and some guidance from you.
We live in a world with a severe housing crisis - not shortage, as there are usually enough units, people just can't afford them.
One would assume the difficulty of building housing has gone down with the general progress of technology - and if all else fails, you can just do what they did 50, 100 years ago where affordability was far less a struggle - people, who had less income in real terms spent proportionally less on it.
So did society devolve that an unit of industrial output has become more expensive? Or did money and resources just go into a parallel 'rich people economy', that has created a constant drain on the resources of average people?
Assuming your labour contribution to these agents is 'minimal':
Why would you own them, instead of some well capitalized billionaire?
To the extent that you do have capital, why do you assume that your 'minimal direction and guidance' would outcompete a full time specialist working for that billionaire?
It's basic economics; larger firms become progressively less efficient for the same reason that communist command economies are inefficient, because there's no internal price signals to guide resource allocation. So there's a natural cap on how big a firm can get (in information theoretic terms, there's a hard limit on the amount of information a centralized structure can process effectively).
And yet for some reason all the algorithmic pricing targets the laborers, when apps hunt for whales they target teenagers. Ridiculous.
There is a need for proper pricing for the rich, i.e. Elon can pay a million dollars per meal. Someone is leaving money on the table.
Love this.
Parking and speeding tickets should have income brackets, at least.
In the early Internet I saw this thing, no idea if it’s true but it sounds good (someone can math check it), goes something like:
A person pays $2 to play basketball on a public court.
Michael Jordan gets paid $2k to play on the same one.
A person pays $100 for basketball shoes.
Michael Jordan gets paid $100k to wear the same ones.
A person pays $40 to go see a basketball game.
Jordan gets paid $400k to attend the same game.
Michael Jordan makes about $5 per second.
If Michael Jordan saved all his money without spending a penny for 250 years…
He wouldn’t even have half as much as Bill Gates!
It made me think differently about money and consumer spending.
> Parking and speeding tickets should have income brackets, at least
AFAIK in some countries this exist but my case is more capitalist oriented. Rich people obviously can pay more since they keep accumulating wealth. It is an obvious sub optimal pricing since the low and even middle class rent/mortgage and other services quickly approaching the most they can pay so they can’t actually save and make wealth.
The longer I participate in the economy the more it starts to feel like the end stages of a game of monopoly. There is nothing left to own unless you already are wealthy and the only way to get ahead is luck.
We should break up monopolies, revoke the vast majority of work visas, end free trade, and unionize.
Thank you for coming to my Ted Talk, please leave a downvote to indicate I caused you emotional distress.
> please leave a downvote to indicate I caused you emotional distress.
How deeply puerile.
this is relatively unremarkable for those with an understanding of wage, labor, profit, price and capital.
capitalism will always seek to reduce labor cost. during the epoch of neoliberalism it achieved great strides in this by reducing labor power through union busting by both thatcher and reagan in the UK and US respectively. it has also effectively curtailed any increase in the minimum wage for nearly 20 years as well as reduced protections, regulation and prosecution for wage theft and overtime pay violations which it maintains as exclusively as civil matters while ensuring theft itself from a merchant in turn is always a criminal matter through the primacy of private property.
to learn more i recommend reading Marx's "Das Kapital," albeit its rather academic. Engels "wage labor" is also a good read to understand why housing is so persistently unaffortable but helps to understand why any other good or service slowly becomes so as well.
The problem is we are one step beyond capitalist exploitation as described by Marx - basically the surplus which fatcat industrialists extract from the laborer does not really exist - you have to compete in the market with others who do the same, and offer things at the lowest possible margins, and if you need to be big enough to get capital in, you have investors who demand their profits.
So basically you are squeezed between the public demanding lower prices and the investors demanding record returns. If you are not a monopoly, that is an impossible ask
Basically the only truly profitable businesses left out there is selling hopes and dreams to investors, and shovels to those who build them, which just about describes tech & AI, with companies who regularly manage to 10x their valuations (and P/E ratios)
Marx fails to imagine a world in which labor actually has little to no value.
His worldview is primarily that capitalists 'steal' the valuable labor. However it doesn't seem that that is actually the world we are in. Instead the intrinsic value of human labor seems to be slowly trending towards zero.
And it kind of makes sense, same has happened with oxen labor, horse labor, etc.
> And it kind of makes sense, same has happened with oxen labor, horse labor, etc.
Sounds like we should start imagining a world where we don't treat people like literal livestock, and then figure out how to get there fast
Isn’t it the complete opposite? i.e. high automatization means that a single worker can create many times more value than before. However it reduces the demand for labor and worker bargaining power. So companies have no incentive to pair “fair” wages.
That is true but likely only temporarily. Why is the single worker even needed?
We tend to have a pretty human-centric worldview so if there's a single human working to keep a hotel running, our default is to attribute all the generated value to them when it really isn't the case. You can imagine that hotel at some point in the near future goes from requiring 1 worker to keep it running to zero.
Then why does every plumber I know own a yacht
Industry cartel.
If you landscaper had one like the plumbers do he'd have his own yacht.
Or he wouldn't exist because you'd buy about as much of his services as you do a plumber's.
low skilled human labor is going to zero. high skill approaches infinity.
> Marx fails to imagine a world in which labor actually has little to no value.
Marxism was an idea formulated especially as a reaction against a world where labor has lost almost all of its value. Which is precisely the origin of capitalism - the idea that money itself can be productive, and thus people who have lots of money can be expected to get more of it.
This was an untrue idea for most of human history, outside of the circles of moneylending and banking.
It doesn't seem like the value of human labor is going away. If you look at luxury goods, they're still "handmade". Telecoms still advertise human representatives. Nursing homes still charge massive amounts for personal service.
What's changing is how much of that surplus value is captured by the workers doing the labor.
Unfortunate to see educated and smart people quote Marx. No serious economist takes him seriously.
Labour theory of value is useless. Falling rate of profit is not empirical. Capitalism didn’t go away as he predicted.
Workers enjoy highest living standards of any time in history.
> Workers enjoy highest living standards of any time in history.
It's entirely possible for someone to be paid a lot in absolute terms, while at the same time paid very little relative to the value that they produce which is monetarily captured by their organization. The truth of the first does not invalidate the injustice of the second.
This is clearly heading in a direction where the USA is going to elect a huge number of socialists, who in turn are going to enact massive taxes on billionaires and break up the monopolies.[1]
This is why I think the billionaire oligarchs are literally mentally ill. They've won the entire game. They control everything. They live like gods, they twitch a pinky and millions dance.
But their response to all of this power is to seek even more of it, destabilizing the very system that has them on top. You would think self-preservation would kick in. The fact that it is not and that their greed knows apparently no bounds is going to lead to their extinction.
For a long time I thought it was hyperbolic to say so, but no longer -- the billionaires are mentally ill.
[1] https://work.news/post/project-2031/
I very much doubt that. There isn't enough class solidarity to pull it off.
There will be a few who brand themselves as such. But actually seizing the means of production and handing them over to the people? -- The oligarchs will burn this country to the ground before they permit that to happen.
It would of course be lose-lose for everyone. But if a significant proportion of the population starts believing (rationally or not) that they have nothing left to lose it could be problematic.
Remember Occupy Wall Street? Back then the oligarchs were somewhat scared.
I too don't believe that GP's dream is going to happen, but the current momentum is much stronger than in the OWS days. Maybe it's less visible to some because the world has moved into online algorithmic bubbles rather than people camping in front of Wall Street. If they were more scared back then than they are now, it's not because the current momentum is actually weaker.
Well yeah. This is why we're calling end-stage capitalism. What's coming looks like technofeudalism.
All companies are rent-seeking. Selling something is no longer a goal.
Prices go up up up up up.
Oligopolies and price fixing is normal.
Monopolies are normal with little/no controls.
People are getting paid a pittance to the work done.
Unions are their weakest in a century.
NLRB is basically frozen due to no quorum on the head board.
Companies routinely scam and lie at multiple places in hiring pipeline. FTC does nothing.
Neither party (Republicans or Democrats), save the DSA, fights for the American people.
Its all coming to a head, and baskets, and guillotines. Anybody who studies history knows what kind of powderkeg this situation is. Its also the reason the Ancient Romans made panem et circunses (bread and circus) cheap or free. You get riots and revolts otherwise.
I find this metric misleading. Where is the extra money going? To whom? Turns out most of it is not going to billionaires. Bulk of it is going to future investments. If we choose not to do that, we lose out on future gains.
Who owns the capital for those future investments? Who will receive returns on those investments?
Speculation or actual investment? Assuming that the allocation of capital is somehow aligned with what’s optimal for the economy/society seems naive
It's not naive, it's near optimal. The system rewards people who've done well at capital allocation with more capital to allocate, and takes capital away from those who've done poorly at it. And there's no better predict of future performance at allocating capital than past performance.
buy shares of companies with any excess money you have and your share will grow
Now consider this against the rising productivity-pay gap that has been widening since teh 1970s [1].
The big picture here is increasing wealth inequality and that has been on steroids since the pandemic.
The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
But even if that's true, don't you want to live in a society where you don't need armed guards at your house and you don't need armed escorts to go anywhere? Because that's what we're heading towards. One of the problems with American society (in particular) being so car-centric is that it lets people insulate themselves from the rest of society more easily. In cities like NYC you're forced to see and deal with the less fortunate. You can't hide from it so easily.
We don't need trillionaires. We need to raise basic living standards so people have food and shelter and we don't need to separate society into slums and armored compounds.
[1]: https://www.epi.org/productivity-pay-gap/
> The only shocking part to me is how people continually and intentionally don't see it or, worse, think they'll be unaffected by it so don't care. You see this on HN where so many people seem to think they'll be Jeff Bezos one day.
Software engineers are a special kind of stupid: the kind that thinks they're smarter than everyone else.
55%? Ew. We can get it even lower. I want my profits.
I am John Capitalism and I revoke the USA's permission to use my name until they crush labor share of income below 50%.
And the Republic response to this is "soc1lism bad!!"
Not even just Republicans, unfortunately. The generation of Americans who grew up in the Cold War were inundated with propaganda about how socialism would destroy America, and then go and say things like this https://www.nytimes.com/2026/06/26/us/politics/moderate-demo...
Yeah. The boomers are a real problem.
The actual labor share of income is significantly higher when you include employer contributions to employee health insurance premiums. Healthcare costs have been rising faster than overall inflation for decades, and while many of those costs are passed on to employees the employers have also absorbed a significant chunk. If we want to increase the labor share then we'll drive down healthcare spending.
And no, there's no simple solution to this problem. The notion that something like "Medicare for All" would solve the problem is a total fantasy, disconnected from actual US healthcare economics. Any real solution will have to work on multiple angles including preventive care, PBMs, provider wages, rationing, drug prices, fraud, malpractice insurance, interoperability technology, etc.
Why wouldn't a single-payer solution work? The margin that the insurance companies take for themselves seems like a good place to start. From there it would spiral out to the third to half of time that all of the clinical staff spend just dealing with insurance issues and insurance billing.
I'm not necessarily opposed to a single-payer system but the margin that for-profit insurance companies take is a tiny fraction of overall healthcare spending. You could zero it out and it would barely move the needle. And many of the largest commercial health plans such as most Blue Cross Blue Shield Association members are non-profit. There is literally no margin.
Provider organizations spend a huge amount of effort dealing with Medicare and Medicaid, which are pretty close to being a "single-payer solution" already in many cases. From an administrative overhead perspective they aren't always easier to work with than commercial health plans. Plus they have enormous problems with fraud, waste, and abuse.
The mandated low margin is part of the problem. When your margins are regulated, the only way to increase profits is to just make everything more expensive. More revenue, same margin, more profits. Humane health care is incompatible with free market economics.
Perhaps its not compatible. But that’s tangential to the situation in the US, at the very minimum you need to have price transparency in any ‘free market’ system.
I think the point is that we might as well just give up the pretense of a free market healthcare solution and just focus on what's humane.
Is it humane to leave a patient to die in an ambulance when a single-payer nationalized healthcare system is over capacity?
https://www.theguardian.com/society/2025/apr/06/englands-nhs...
I'm not trying to be snarky here, the point is that there is no easy solution and optimizing based on what politicians subjectively consider "humane" isn't going to get us anywhere. If we want to actually fix the problem then we need to focus on what's economically feasible rather than low-effort hot takes and sound bites. Free markets, with reasonable limits, can be part of that solution by revealing consumer preferences and allowing for efficient allocation of limited resources.
> Is it humane to leave a patient to die in an ambulance when a single-payer nationalized healthcare system is over capacity?
I think painting the inhumanity of that as a consequence of the structure of the healthcare system is disengenuous at best, especially as the implicit solution you're proposing is to artificially lower utilization rate and access. Deflecting patient deaths into "technically not our fault, they didn't try to get help" by exploiting economics is in no small terms extremely inhumane.
The answer to that is that near universally in the world, our labor pool of medical personnel is too small, and almost all of it has to deal with an arbitrary restriction of labor supply. Stupidly, I have felt this many times in America, so trivially it's a problem no matter the structure of the healthcare system. Optimizing towards maximizing the number of nurses, doctors, pharmacists, the whole spread, in a society is underdiscussed but obviously beneficial (for everybody but those who profit off of the labor scarcity)
is it humane to solve that problem by excluding people based on income? that's what your proposing, as that's how markets solve problems like this: if more people need a product/service than the market can provide prices go up and the poor are excluded. also not trying to be snarky but that's the choice in front of us. part of the problem with free market solutions to healthcare is the feasibility of walking away from a bad deal. in every other space prices are regulated downward by the buyers' ability to either buy something else or do without but there is no doing without emergency care and doing without preventive care is just deferring the cost until it's emergency care at punitive interest.
Stop lying, I haven't proposed anything of the kind. Free market solutions often include giving cash subsidies to certain participants (and you would be aware of this if you had bothered to do even basic research on serious healthcare system reform proposals before commenting). I'm simply pointing out that it's a complex problem with multiple causes and there is no simple solution.
Even cash subsidies can be a kind of chain. Why wouldn't we just subsidize the whole thing for everyone then? And if the purpose of a health insurance plan is to collect groups of people into "risk pools," then why wouldn't we just put everyone in a global risk pool? And if the purpose of a health insurance plan is to negotiate rates on behalf of a bunch of people, why wouldn't we have someone like CMS determine those rates? And if the purpose of a health insurance plan is to make sure everyone has health care, why would we create a system where people are excluded by means-testing?
I don't think the core issue is the health insurance companies stealing money, it's the deep inefficiencies that come from the position the insurance companies hold.
How many man-hours are spent dealing with insurance paperwork? How much do hospitals and doctors spend each year just dealing with that interaction, rather than treating patients?
> Plus they have enormous problems with fraud, waste, and abuse.
I'd say "enormous" requires some evidentiary proof. Obviously there is fraud and waste. But almost all large scale systems have that. We should certainly try to minimize it wherever we can but I don't think "waste and fraud exist" are a reason to not pursue a path.
>I'd say "enormous" requires some evidentiary proof. Obviously there is fraud and waste. But almost all large scale systems have that. We should certainly try to minimize it wherever we can but I don't think "waste and fraud exist" are a reason to not pursue a path.
Are you living in the same country as the rest of us? There is plentiful evidence of the enormous fraud and waste. It’s not even a point of debate anymore.
For what it's worth I know you've worked on FHIR and probably know a lot of details I don't. Actually I'd be interested in talking to you about FHIR.
That said!
1) In the big picture isn't the US clearly paying more than other countries? I'm sure some of this is eg a janitor in the US costs more than a janitor elsewhere, but still...
2) Isn't the cap for the margin that insurance companies can take 20%? That is, they have to pay out 80% as claims take 20% for overhead
3) Doesn't insurance also induce more work done by everyone else who has to deal with them? So the margin the insurance company itself takes is not the only cost they add. Maybe they make providers do more paperwork, or let patients order tests etc that they would not if they were not spending other people's money, or some other reason. Say insurance pays out 80%, but 30% of documentation or actual work is not done by insurance but only exists because of them, now we're down to 56%.
I say this because literally yesterday, my wife, a pediatrician, after she spent the day seeing patients and got home to go through notes, had to leave a message with an insurance company: she saw they faxed her clinic on Saturday, when the clinic was closed, to cancel care for a patient with an ongoing chronic condition with no changes unless the insurance company got a reply in 48 hours (again, while the clinic was closed!). Now she has to schedule some kind of I don't even know what with them, to confirm the condition is the exact same, except she sees patients all day so it's a pain to schedule...
idk the fact that BCBS is a non profit and has no margin in some technical sense does not seem like a big consolation, something is rotten no?
(edit - the insurance company in the anecdote is not BCBS)
I've worked on a lot of healthcare interoperability standards, including HL7 FHIR. Those can be part of the solution in terms of making the system operate more efficiently and cutting administrative overhead. In many cases payer and provider organizations are still doing things manually that could be automated using existing standards. But they fail to do so due to lack of vision and insufficient technical resources. Literally everything that can be done with a fax can be done faster and better with X12 / NCPCP / DirectTrust standards that have been around for years and are widely supported by commercial EHRs.
It's true that no matter how you look at it, the USA spends a lot more per capita on healthcare relative to outcomes. But you have to be careful what outcome metric you look at. Like we're not doing great on life expectancy, but much of that is due to factors largely outside the healthcare system like violence, vehicle crashes, and lifestyle choices. And in other areas like 5-year cancer survival rates or new drug development we're at or near the top. Part of the problem in the USA is that we seem to be culturally incapable of admitting that rationing is needed, and that it simply isn't feasible to deliver excellent care to everyone, so political reform debates devolve into sound bites about "death panels".
The Affordable Care Act (Obamacare) set a minimum health plan medical loss ratio of 80%, or actually 85% for larger plans. And in practice most come in higher than that due to competitive pressures.
https://www.cms.gov/marketplace/private-health-insurance/med...
There's a huge amount of administrative overhead in dealing with health plans for things like claims and prior authorization. Much of that is imposed not so much by insurers themselves but by employers who want to hold down costs. Like a commercial insurer would be happy to sell a plan that would pay every claim immediately at 100% with no questions asked. It would be less work for them. But no one would buy it because costs would explode. Medicare and Medicaid plans also have prior authorization and peer review processes. Something like a quarter of all healthcare services are "low value care" which doesn't align with evidence-based clinical practice guidelines and may even harm the patient, so when health plans apply review processes the right way then ideally it's better for patients and holds down costs for everyone.
To be clear, I'm not here to defend commercial health insurance companies. They are part of the problem and some reforms in that area are sorely needed. But let's have an honest debate about it and stop pretending that eliminating them would solve the deeper systemic problems.
There are countries in Europe which have entirely privatized healthcare systems (not even medicare/medicaid equivalents). US tried adopting some of their practices with Obamacare and even that didn’t work out. Singlepayer isn’t really necessary to have a reasonably affordable and accessible healthcare system proper regulation is.
As successful as Obamacare has been it didn't really do much to lower the cost of healthcare or claw back the billions wasted to insurance company profits. There might be some kind of regulation just as effective as single payer, but we've never seen it anywhere in the US.
> As successful as Obamacare has been it didn't really do much to lower the cost of healthcare
It dramatically lowered the cost to consumers. Further, conflating overall healthcare spend with the portion of spend tied to a significantly lower-cost population is apples and oranges at best and represents a fundamental misunderstanding of healthcare cost in general. It's ok to not have opinions about things you know you don't understand.
insurance issues are provider and insurer going back and forth detrmining if doctors assessment of necessity is agreed upon.
i am not familiar with universal system. In that system if your doctor thinks something is medically necessary then thats the end of it and its gets done?
In my experience, insurance issues are usually insurer and patient going back and forth and then patient getting 6 different answers from 6 different representatives, then reviewing the 3000 page plan document, finding the single line that properly describes what should have happened, calling the insurance company, explaining to the rep how your plan works, and demanding that it be reprocessed. Like my wife has to do this frequently and spends several hours per month dealing with this but she has saved us probably tens of thousands of dollars in mis-processed claims that the insurance companies can't even properly handle. I usually am the person carefully reading plan docs, finding the proper billing codes, and explaining things like that to the insurance company. Sometimes we have to get the doctor's billing people to code things, like once they coded something that was an outpatient appointment as a minor surgery which could have cost us a lot of money.
So in my book since we get to speculate about what the system should look like, it should absolutely result in people getting care without all of this run-around. It's about eliminating as much misery as possible from the system and letting people just get treated and providers just get paid. We can talk about efficiency once the misery is gone.
All healthcare systems have some form of rationing. Even if your doctor thinks something is medically necessary it can only get done if the system actually has capacity.
In most countries where there is universal coverage with a single payer, certain expensive treatments have long waiting lists or are simply unavailable at any price. Thus we see wealthy Canadians coming to the USA as medical tourists and paying cash for procedures like MRI scans or joint replacements in order to avoid the queue back home. There are always trade-offs, it's just a matter of what we want to prioritize.
yea queue is fine . i was wondering about gp's claim that universal would be more efficient because there is no more back and forth about approving.
i wasnt sure if it simply takes a different form or gets eliminated completly.
You're citing some of the results of a runaway healthcare industrial complex, such as drug prices, as reasons why the thing that would keep such a complex from emerging won't work.
Employers might be contributing more to healthcare costs, but that's because they have to in order to keep coverage for their employees at all as premiums increase, and individual out-of-pocket costs are still rising as a result of coverage denial and high deductibles.
While healthcare spending isn’t included in some economic measures like wages (which has contributed to the distorted productivity-pay gap discourse), labor share as discussed in this article is actually calculated using total compensation, the “total of payments to labor to produce output, including wages, benefits, and other monetary or nonmonetary payments,” which includes employer contributions to medical care not just wages and salaries.[0] They do discuss payroll share later on though, which doesn’t include non-wage compensation.
[0] https://www.bls.gov/opub/hom/opt/calculation.htm
I've built and audited medical billing systems and billing practices. It isn't an economics issue in a traditional sense. Infact it would drastically reduce complexity of these systems and payments over time, even allowing private insurers to exist but have to compete with a base general coverage. (many smarter people than me at princeton did economics showing this worked out as a net less expensive than what we are doing now) The biggest reason why its not the simplistic solution, is politics of all the middle men (me) making exponential returns from solutions to these systemic issues.
Too much money in the system being flawed, look at pricing for any HIPAA safe products and thats just technology. Money is so hard to get for healthcare providers it is its own industry of revenue cycle management and thrid party billers. Most of these physician lead practices charge more is because planning your account around reemburcement cycles from insurance companies are 30-120 days if your lucky is an advanced accounting problem. (Thats excluding complexities of audits, LOPs, network rates etc.) Medicare/medicaid the fraud side has lots of tiny wins through leaning on tax information more, taking the model from the successful basic income studies and trials worked out.
I'm not sure what you mean by pricing for "HIPAA safe products"? It's not particularly expensive to comply with the HIPAA Privacy Rule, and honestly that level of privacy and security is the minimum we ought to expect in any industry that deals with sensitive consumer data.
There aren't as many physician-led practices anymore. Most of them have been rolled up into larger health systems in order to achieve economies of scale and increase negotiating power with commercial health plans. Which is one of the factors driving up overall healthcare system costs.
Do other countries' state healthcare system costs count towards their labor share of income? If not, it seems sensible not to account for them that way in the US, or you're creating a much more serious apples and oranges problem for international statistics (which are often cited/compared for these figures)...
The data here would already include healthcare contributions.
> If we want to increase the labor share then we'll drive down healthcare spending.
It may not be simple but it's clear the United States is doing something catastrophically wrong. All the other healthcare systems on the planet in developed countries have problems, sure. But we spend magnitudes more money to receive middling-to-shit healthcare. Medical debt and bankruptcy is a unique American problem that also happens to be the most reliable way for otherwise productive and prosperous members of our society to end up fucking homeless. Because they got SICK. I rarely use the word "evil" but that really fits IMO.
Like you cannot tell me with a straight face that the insurance industry couldn't be blown the fuck off the map tomorrow and literally everyone who doesn't own an insurance company isn't instantly better off.
If the insurance companies disappeared tomorrow, presumably all medical care is paid for at point of use by patients? That would mean stochastically facing catastrophic bills from providers. I am sympathetic to the idea that healthcare providers and systems here should be making no more than in, say, Europe, but an orthopaedic surgeon being paid the $300k USD-equivalent in Germany instead of his $750k USD income today at median would be very unhappy.
> would be very unhappy.
Significantly increasing the supply of doctors would solve that, though.
There are certainly some things that we could do to increase the supply of physicians by reducing the cost of education, expanding access to combined BS/MD programs, and increasing the number of residency slots. But those measures will have marginal effects, and take years to show up in supply numbers. There just aren't a lot more people who are mentally and physically capable of doing this work.
Part of the problem is that we force physicians to waste too much time on administrative work. Some of this could be delegated to cheaper employees or not done at all, thus effectively increasing supply. Administrative overhead is also one of the factors driving physicians to quit and pivot to other careers or retire early, which further constrains supply.
This part is controversial but we'll also have to shift a lot of primary care to Physician Assistants and Nurse Practitioners. Care quality might be lower in some cases but for routine conditions it's probably better to see a PA/NP today instead of waiting weeks for a physician.
> but an orthopaedic surgeon being paid the $300k USD-equivalent in Germany instead of his $750k USD income today at median would be very unhappy.
I'm sure he'll manage.
Sure, but the rare type of person capable of becoming an orthopedic surgeon has other career options. There are some who are drawn to it as a calling because they love caring for patients and would do it regardless of wages. But most respond to economic incentives, so at the margins some will choose to go into technology or finance or something and make more money there.
When we fix the price of something below the market clearing price then there will always be a shortage. This is inevitable. We might decide that having a shortage of orthopedic surgeons is acceptable but let's not pretend that there are no trade-offs.
Germany has a stagnant economy so it's easy for their healthcare system to pay doctors lower wages because they have few other options. Baumol's cost disease is a real factor in healthcare, and it impacts the USA more than most other countries precisely because our overall economic growth has been so robust.
If you as a person are turned off of a career because you can only make a mere, paltry peasant wage of $300k per year, then I think that's really a you problem there.
And as to your comments about shortages, we already have shortages.
Feel free to moralize all you like about the maximum wages other people should earn if that makes you feel better but that won't solve any of the actual problems. In the real world, most people respond to economic incentives. Shortages can always get worse. (I am not a physician.)
> In the real world, most people respond to economic incentives.
Then why is there a shortage? Are you telling me the $750,000 yearly compensation still isn't enough?
Are you telling me that $750K yearly compensation still isn't enough for an NBA player? Maybe they should be nice and agree to play for less because they love the game and want to entertain people.
If we're talking about orthopedic surgeons specifically, a good one is essentially an elite athlete. A single tiny error can leave a patient dead or crippled. It takes a rare combination of intelligence, ability to focus for hours, physical strength, and fine motor control. So only a minuscule fraction of people even have the necessary potential. And the training pipeline is necessarily long because they need a lot of reps to build up the mental and physical skills, and to weed out those who aren't suited. Sure, you can find some people who are willing to do the work for lower wages but will they be the right people?
Beyond the wage issue, supply for all physicians is artificially constrained by training system capacity limits, as I already explained above. There are things that could be done to make training a bit cheaper and maybe two years shorter. But the easiest win would be to make more efficient use of the existing supply by optimizing workflows, and automating or eliminating administrative tasks.
What the US is doing is nonsensical. Modern Healthcare is an industrial system designed to handle large populations in bulk. But it only works if everyone can get timely access. This is true for things like mass screenings and medication.
The insane thing is denying it to half of the population doesn't really mean the other half gets to save that much money in real terms.
I strongly agree that socializing the healthcare industry will not help in any way. To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance. Anyway, with respect to the labor share of income, that is not correct. Employer contributions to employee health insurance premiums are included in the labor share.
This is true in the sense that if I sell water in the desert at $100 a bottle, at 900% profit margin, doesn't mean that if the government steps in and pays half of it, that the resulting system is somehow good, just because less people are dying of thirst.
> To the extent that healthcare costs have skyrocketed, it's precisely because of government intervention in the U.S. Healthcare industry has massively increased over the last 50 years, especially in the form of tax incentives for employers to compensate employees by way of health insurance.
It fails to follow logically that one specific way the government got involved that drove costs up means that any possible intervention is worse than completely being hands-off. How do you explain pretty much every other developed country in the world having more government involvement but lower costs than the US?
The problem is, quite simply, insurance.
When something is paid for from a big nebulous ball of money rather than straight out of people's pockets, the downward pressure on prices just isn't there in the same way. The conversations between practitioners and insurers are about whether something is necessary, not about whether or not the practitioner is charging too much for it.
Here in the UK we see it, too - not so much in human healthcare since we have the NHS - but very definitely in animal healthcare; vets' bills have skyrocketed over the last couple of decades, in a mutually-reinforcing feedback loop with the rise in pet health insurance.
Health care costs across the developed world have skyrocketed for exactly the same structural reasons. Yes, implementations have been different in their details, but the larger structure is the same no matter where you look in the developed world. Government intervention has increased. That means more top-down management and less bottom-up self-organization based on private property and individual incentives.
This is not some spurious speculation. That market-based systems drive down costs enormously is replicated across dozens upon dozens of industries. It's one of the most replicable results in economics to the extent that economics can be replicable. As for why the costs in other countries are not quite as high as the U.S., it's because health care costs also increase as per capita GDP increases and the U.S. has higher per capita GDP. Moreover, because the U.S. has some aspects of its health care system still living more in the private sector, there is less top-down rationing. Other countries see very clear examples of rationing, so people spend less on end-of-life care.
> I strongly agree that socializing the healthcare industry will not help in any way.
It would eliminate the tens of billions that are wasted on insurance company profits.
> And no, there's no simple solution to this problem. The notion that something like "Medicare for All" would solve the problem is a total fantasy, disconnected from actual US healthcare economics. Any real solution will have to work on multiple angles including preventive care, PBMs, provider wages, rationing, drug prices, fraud, malpractice insurance, interoperability technology, etc.
I have been saying this for years. I'm so tired of social media memes turning into sage wisdom for an entire generation who can barely spell healthcare, let alone have any vague understanding of it.
I'm and-then'ing, not disagreeing, but the big healthcare cost fix, IMO, still centers around education cost reform, and fixing the supply of mid-levels+ across the country.
Yeah, I guess the rest of the developed world doesn’t really ‘get it’ - fools!
Could America be wrong? No, no, it's the other countries!
they get subsidized by usa pharma industry. Their costs will rise if pharma prices are negotiated by govt here too.
That sounds good to me. Why should millions of Americans die every year because they can't afford their medications just so that other countries can get their meds at extremely low prices? Let's also have the US government negotiate our prices and let things even out across the board.
Removing a useless middleman party that needs a profit margin, and removing the perverse incentives of them having to prove their value thus having inflated prices with fake discounts, and centralising all healthcare purchasing power in a single entity, is absolutely going to solve a lot of challenges US healthcare faces
Is there a reference you can cite with corrected numbers? Honestly this sounds like excuse-making, especially when used as a jumping point into a decidedly partisan take (complete with scare quotes!) on the essentially unrelated subject of public health care financing.
The idea seems to have merit, but it's unconvincing to people outside your bubble and I'm dubious.