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Claiming a Bigger Share of the Economic Pie - 5/20/16

For years Americans have been reaping fewer gains from a growing economy in the form of pay and benefits.  Shareholders have been reaping more, helping to explain rapidly expanding wealth gaps in America.  But as indicated by Neil Irwin, recently, that trend has been reversing. 

While Irwin warns that the trend remains in early stages and may not last, numbers make it apparent that over the past few years, workers have been claiming a bigger share of the economic pie and shareholders a smaller one.  During the current year, this has taken the form of steady growth in wages and weak earnings for public traded companies. 

Data indicate that at the beginning of twenty thirteen, sixty one percent of national income went to pay and benefits for workers.  By the end of last year, that share had risen to nearly sixty three percent.  That’s still well short of the sixty six percent figure that prevailed during the early nineteen nineties, but at least the numbers are going in the right direction from the perspective of workers. 

Had the proportion of national income going to workers in early twenty thirteen stayed constant, there would be more than two hundred and fifty billion dollars a year less flowing into American paychecks than is the case.  That’s about nineteen hundred dollars per household.   

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.