Inequality and rising profitability in the United States, 1947–2012

Edward Wolff

    Research output: Contribution to journalArticle

    Abstract

    The last 40 years has seen slow growing earnings and income for the middle class, as well as rising overall inequality. In contrast, the early postwar period witnessed rapid gains in wages and family income for the middle class and a moderate fall in inequality. The ‘booming’ 1990s and the first decade of the 2000s did not bring much relief to the middle class, with median income growing by only 2% (in total) between 1989 and 2012. The stagnation of middle class living standards since 1973 or so is attributable to the slow growth in earnings. While average earnings almost doubled between 1947 and 1973, it advanced by only 22% from 1973 to 2012. The main reason for the stagnation of labor earnings derives from a clear shift in national income away from labor towards capital, with overall profitability rising either back to previous postwar highs or to new highs by 2012. Based on regression analysis, a positive and significant connection is found between top income shares and the profit share. The unionization rate, computer investment per worker, the minimum wage, and the unemployment rate are also significantly related to top income shares.

    Original languageEnglish (US)
    Pages (from-to)741-769
    Number of pages29
    JournalInternational Review of Applied Economics
    Volume29
    Issue number6
    DOIs
    StatePublished - Nov 2 2015

    Fingerprint

    Middle class
    Profitability
    Stagnation
    Top incomes
    Income
    Labor
    Unemployment rate
    National income
    Median
    Regression analysis
    Standard of living
    Profit share
    Workers
    Family income
    Unionization
    Wages
    Minimum wage

    Keywords

    • earnings
    • profit share
    • profitability income
    • wage share

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Inequality and rising profitability in the United States, 1947–2012. / Wolff, Edward.

    In: International Review of Applied Economics, Vol. 29, No. 6, 02.11.2015, p. 741-769.

    Research output: Contribution to journalArticle

    @article{1f9411b44c1248a18e88e5b1243e4509,
    title = "Inequality and rising profitability in the United States, 1947–2012",
    abstract = "The last 40 years has seen slow growing earnings and income for the middle class, as well as rising overall inequality. In contrast, the early postwar period witnessed rapid gains in wages and family income for the middle class and a moderate fall in inequality. The ‘booming’ 1990s and the first decade of the 2000s did not bring much relief to the middle class, with median income growing by only 2{\%} (in total) between 1989 and 2012. The stagnation of middle class living standards since 1973 or so is attributable to the slow growth in earnings. While average earnings almost doubled between 1947 and 1973, it advanced by only 22{\%} from 1973 to 2012. The main reason for the stagnation of labor earnings derives from a clear shift in national income away from labor towards capital, with overall profitability rising either back to previous postwar highs or to new highs by 2012. Based on regression analysis, a positive and significant connection is found between top income shares and the profit share. The unionization rate, computer investment per worker, the minimum wage, and the unemployment rate are also significantly related to top income shares.",
    keywords = "earnings, profit share, profitability income, wage share",
    author = "Edward Wolff",
    year = "2015",
    month = "11",
    day = "2",
    doi = "10.1080/02692171.2014.956704",
    language = "English (US)",
    volume = "29",
    pages = "741--769",
    journal = "International Review of Applied Economics",
    issn = "0269-2171",
    publisher = "Routledge",
    number = "6",

    }

    TY - JOUR

    T1 - Inequality and rising profitability in the United States, 1947–2012

    AU - Wolff, Edward

    PY - 2015/11/2

    Y1 - 2015/11/2

    N2 - The last 40 years has seen slow growing earnings and income for the middle class, as well as rising overall inequality. In contrast, the early postwar period witnessed rapid gains in wages and family income for the middle class and a moderate fall in inequality. The ‘booming’ 1990s and the first decade of the 2000s did not bring much relief to the middle class, with median income growing by only 2% (in total) between 1989 and 2012. The stagnation of middle class living standards since 1973 or so is attributable to the slow growth in earnings. While average earnings almost doubled between 1947 and 1973, it advanced by only 22% from 1973 to 2012. The main reason for the stagnation of labor earnings derives from a clear shift in national income away from labor towards capital, with overall profitability rising either back to previous postwar highs or to new highs by 2012. Based on regression analysis, a positive and significant connection is found between top income shares and the profit share. The unionization rate, computer investment per worker, the minimum wage, and the unemployment rate are also significantly related to top income shares.

    AB - The last 40 years has seen slow growing earnings and income for the middle class, as well as rising overall inequality. In contrast, the early postwar period witnessed rapid gains in wages and family income for the middle class and a moderate fall in inequality. The ‘booming’ 1990s and the first decade of the 2000s did not bring much relief to the middle class, with median income growing by only 2% (in total) between 1989 and 2012. The stagnation of middle class living standards since 1973 or so is attributable to the slow growth in earnings. While average earnings almost doubled between 1947 and 1973, it advanced by only 22% from 1973 to 2012. The main reason for the stagnation of labor earnings derives from a clear shift in national income away from labor towards capital, with overall profitability rising either back to previous postwar highs or to new highs by 2012. Based on regression analysis, a positive and significant connection is found between top income shares and the profit share. The unionization rate, computer investment per worker, the minimum wage, and the unemployment rate are also significantly related to top income shares.

    KW - earnings

    KW - profit share

    KW - profitability income

    KW - wage share

    UR - http://www.scopus.com/inward/record.url?scp=84942986376&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=84942986376&partnerID=8YFLogxK

    U2 - 10.1080/02692171.2014.956704

    DO - 10.1080/02692171.2014.956704

    M3 - Article

    AN - SCOPUS:84942986376

    VL - 29

    SP - 741

    EP - 769

    JO - International Review of Applied Economics

    JF - International Review of Applied Economics

    SN - 0269-2171

    IS - 6

    ER -