page_title: Corporatocracy
section_title: Share of income
hierarchical_section_title: Corporatocracy / Perceived symptoms of corporatocracy in the United States / Share of income
caption_attribution_description: English: The image shows U.S. total compensation and wages/salaries (a subset of total compensation), each relative to GDP, for 1950-2013. These are a proxy for the share of national income going to labor as opposed to capital. It shows the relative share of GDP for labor declining since 1970. Another version with the denominator as national income is included here&#91;1&#93; A NYT article illustrating the concepts is here.&#91;2&#93;
context_page_description: Corporatocracy is a recent term used to refer to an economic and political system controlled by corporations or corporate interests. It is a form of Plutocracy.
  The concept has been used in explanations of bank bailouts, excessive pay for CEOs as well as complaints such as the exploitation of national treasuries, people and natural resources. It has been used by critics of globalization, sometimes in conjunction with criticism of the World Bank or unfair lending practices as well as criticism of "free trade agreements".
context_section_description: With regard to income inequality, the 2014 income analysis of University of California, Berkeley economist Emmanuel Saez confirms that relative growth of income and wealth is not occurring among small and mid-sized entrepreneurs and business owners (who generally populate the lower half of top one per-centers in income), but instead only among the top .1 percent of income distribution, who earn $2,000,000 or more every year.
  Corporate power can also increase income inequality. Nobel Prize winner of economics Joseph Stiglitz wrote in May 2011: "Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to zero percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest." Stiglitz explained that the top 1% got nearly "one-quarter" of the income and own approximately 40% of the wealth.
  Measured relative to GDP, total compensation and its component wages and salaries have been declining since 1970. This indicates a shift in income from labor (persons who derive income from hourly wages and salaries) to capital (persons who derive income via ownership of businesses, land and assets).
  Larry Summers estimated in 2007 that the lower 80% of families were receiving $664 billion less income than they would be with a 1979 income distribution, or approximately $7,000 per family. Not receiving this income may have led many families to increase their debt burden, a significant factor in the 2007–2009 subprime mortgage crisis, as highly leveraged homeowners suffered a much larger reduction in their net worth during the crisis. Further, since lower income families tend to spend relatively more of their income than higher income families, shifting more of the income to wealthier families may slow economic growth.
caption: Labor's share of GDP has declined 1970 to 2013, measured based on total compensation as well as salaries and wages. This implies capital's share is increasing.
exif: {}