This amazing and depressing graphic comes from Stephanie Pomboy of MacroMavens, whose work is often featured by Alan Abelson in Barron’s. As the chart shows, private wage growth has fallen precipitously in the last ten years. Once the envy of the world, notes Abelson, the great American job machine “has suffered a serious breakdown.”
The crash in private job creation is paralleled by the huge shift in returns to capital and labor, unprecedented in the post World War II period.
A new form of capitalism—sort of like the old form, on steroids—has emerged in the United States. While concentrating wealth in a sliver of the population, it creates a larger class of marginal people just scraping by, if at all.
Does the high level of corporate profits betoken a permanent change? I think that is unlikely. Probably that level will revert back closer to the mean.
It is not clear, however, what will bring it back to the mean. Political remedies to do so seem exhausted. Corporations have shown they know how to extract a profit and have un-moored themselves from the communities in which they were once embedded.
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Source for Employee Compensation chart: Charles Hugh Smith
Source for Food Stamp Participation: Zerohedge