“We are the 99%”, the slogan of Occupy Wall Street, is a reference to the rising wealth of the top 1 per cent of US income distribution. But an equally valid slogan might be: “We get 58%”.
That figure is the share of US national income that goes to workers as wages rather than to investors as profits and interest. It has fallen to its lowest level since records began after the second world war and is part of the reason why incomes at the top – which tend to be earned from capital – have risen so much. If wages were at their postwar average share of 63 per cent, workers would earn an extra $740bn this year, about $5,000 per worker, according to FT calculations.
This decline in workers’ share of income is actually holding back the national recovery, as “workers on lower wages consume much of their income, while higher wage earners and those with capital income are more likely to save.” Instead of going to the people who are likeliest to spend it, and thus boost the economy, more income is going to corporations and rich people who are just sitting on it. Corporations are actually holding trillions of dollars in cash reserves (and clamoring for more tax breaks), money that could create millions of jobs if it were deployed in a different fashion.