Chris Dillow — The Wage Problem

My chart shows wage and profit shares since quarterly data began in 1955.It shows that the wage share - the proportion of national income going to the many - is now around its post-2000 average. Polly's right to say that the wage share fell "long before the crash". But it did so between 1975 and 1997. It's the profit share that is unusually low by recent standards, not the wage share [in the UK]....

The most obvious solution is the wage crisis isn't to shift the share of incomes - I share Hopi's scepticism about micro-interventions - but simply to increase the demand for labour through macroeconomic policy. Sadly, though, with monetary policy of dubious efficacy, looser fiscal policy ruled out - because it just is, all right? - and jobs guarantees used to harass the jobless rather than to provide an employer of last resort, such policies probably won't be equal to the scale of the task.

Stumbling and Mumbling
The Wage Problem

Chris Dillow | Investors Chronicle (UK)