This is consistent with the observation that the top 10% have captured a disproportionate share of GDP growth over the past few decades.
https://equitablegrowth.org/new-data-reveal-how-u-s-economic...
"The past three economic expansions have largely benefitted the top 10 percent. In each, the top decile received between 47 percent and 59 percent of all income growth in the expansion."
Also note: Labor share has declined similarly across OECD countries for several decades.
Automation, robots, software etc. they are all capital share.
> Automation, robots, software etc. they are all capital share.
I highly doubt automation and robots are a meaningful factor here, but IP and outsourcing have the exact same as automation.
New factories use very few people, part of the reason why it's difficult for many countries to industrialize like South Korea or China did (climbing manufacturing ladder).
> New factories use very few people
That's both true and false. Yes they need very few people to operate, but building and maintaining still need a lot of people.
Employee compensation comes from capital. And employees are working at companies that provide robots, etc.
There's a return on capital than is not spent on employees. That reflects how much capital is growing and how much can be spent on employees in the future.
>And employees are working at companies that provide robots, etc.
Just as are the top executives. And the shareholders that have put money into companies that provide "robots, etc.". All these people, including labor, are stakeholders. If there was 5% GDP growth that got reflected as 5% growth in net earnings for the company, one would expect that all the stakeholders would see roughly a 5% increase in their personal earnings from the company. The dollar amount would be higher for higher earners (5% of $1M is greater than 5% of $50k), but the percentage increase would be roughly in line. The real world results are not even close to this "rising tide lifts all boats" ideal.
> Employee compensation comes from capital.
All human collective endeavors (with few exceptions) require 3 kinds of human-related input: capital, labor and ideas.
Nobody puts their capital into an endeavor in which the plan is for the that capital to provide renumeration for the labor for more than the shortest possible time (*). The goal is always to generate revenue in sufficient volume to pay for the labor, and when that goal is met, that success is a function of all 3 kinds of contribution.
So no, employee compensation does not come from capital, but from revenue that results from the successful interaction of capital, labor and ideas.
(*) non-profits would be an obvious exception, except that nobody actually talks about investing capital in such organizations, we just make "donations" or "grants". That money plays the same role as capital, however.
Every discussion about the 'top 10%' seems to make the underlying assumption that the set of people who fall under that category are consistent. While there are certainly individuals who enter the top 10% (or top 1%) and stay there; there are large numbers of people who move in and out of those categories.
For me personally, I am in the top 10%; but a few decades ago, I was not.
The statistical evidence for your claim is not good. There is certainly a generational effect in that 5 year olds are typically not in the upper decile, simply because they generally have little to no individual wealth or income. But in the USA at least, most people die in the same decile they were born into.
Exactly! And while a well off person may have a memory of a time in their life when they were not doing well (like in school, starting their career etc.) that can be misleading. You tend to end up like your parents more then was true three or four generations ago for many reasons: tax policy, less physical mobility, people tending more to marry with similar levels of education or income.
People debate how much social mobility there is in the US, but it seems pretty clear that the trend has been toward less mobility. The founding fathers of the US did not want to replace one aristocracy with another. Obviously there are some who think the change makes sense-- not me.
Something I've seen a lot is claims about individuals being self made, climbing the ladder from grit and ingenuity and such. Look at Bezos, he's an example of climbing the ladder! Or Zuckerberg!
And when you dig a bit more, you kinda find out this isn't really true?
I mean look at this AI summary of asking "Was Jeff Bezos born into wealth"
> Jeff Bezos was not born into wealth; his mother was a 17-year-old student and his adoptive father was an impoverished Cuban refugee who arrived in the U.S. alone at age 16. However, his maternal grandfather owned a large Texas ranch and later provided roughly $250,000 to help fund the launch of Amazon
Oh so his parents weren't wealthy only his grandparents. That's totally different
You know what my Grandpa gave me? A used car worth about 3 grand. Still amazing, I'm still very grateful to him! But the comparison here is absolutely not in the same league!
And I'm still a fortunate one, because many people get much less than a car from their families
The question is how many people get $250k from their family and lose it all.
Everyone's life is a mix of skill and luck, so to discredit skill, you would need to quantify the luck. An east example is a lottery winner, a hard example is a Bezos. Any investor with the foresight to see what Bezos could do with grans money, would jump past her in line and give him triple.
This is bourgeois idealism. In reality, the people in the top 10% remain there and rarely fall
This is a good point I haven't considered in the past and worth to take into the overall discussion.
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"Top 10%" is such a misleading slice here. The guy who's at the 9.99th percentile is a normal salaried worker not doing better. The gains are entirely concentrated in the tiny billionaire slice buried inside that 10%. In fact wage growth for the top decile has been recently slower than bottom deciles [1]. Incomes still grow fast in the top decile, but mostly due to assets. And those assets are disproportionately in the hands of the billionaire slice of that top decile.
[1] https://www.epi.org/publication/strong-wage-growth-for-low-w...
The top 10% incomes have tons of assets, especially homes.
Saying that billionaires "disproportionately" have more assets than non-billionaires is a tautology that says nothing. You might as well say that tall people have disproportionately more height than people who are not tall. Billionaire is a statement about wealth, not income.
> In fact wage growth for the top decile has been recently slower than bottom deciles
Which is a very good thing, but also doesn't address anything. The bottom deciles live from their wages. The top decile either put most of their wages into assets, are already so wealthy that their wages don't matter, or live in luxury they can't afford.
The macroeconomic purpose of inflation as a tool is to lower the wages of high wage earners - because socially you can't really lower people's wages, at best you can refuse refuse them raises. It's easy to raise the income of lower deciles to offset inflation, either through legislation or safety net. Middle-high wage earners who do nothing under inflation face an effective pay cut.
> The guy who's at the 9.99th percentile is a normal salaried worker not doing better.
He is not normal, he is in the top 10%. His income triples or quadruples a median income. He is of course not doing better than himself, but he is doing better than 90% of other people by definition.
Point is that income from dividends, rent and capital gains far outstrips the $150k the 90th percentile guy makes [1], which you have conveniently ignored. The $150k 90th percentile earner has more common with the $50k 50th percentile earner than he does with the billionaire earning $100M of capital gains, dividends and rent from assets. The 90th percentile guy is a wage laborer like the 50th percentile guy; they are effectively the same class. The only different class is the capital owning class.
Being able to afford a slightly nicer car or house does not change your class. Being able to influence elections, buy lobbying power, play power games, being in the "in" group of capitalism changes your class.
[1] https://dqydj.com/income-percentile-calculator/
Aren't most of the tech workers here part of that 10% and I'd assume they own houses in some of the most expensive areas, so they are technically part of the capital class?
Being a part of the "capital class" does not mean simply having passed a net worth threshold.
It means having sufficient liquid capital that you can invest it in uncertain outcomes, generally without fear of poverty or perhaps any real negative effects on one's life at all.
Owning a very expensive home in a very high cost-of-living place (or even in a not-so-high cost-of-living place) does not place a person in that position.
defining classes is complicated. if you do it based on income percentile it will always be arbitrary and never reflect actual economic relations.
the most accepted way to divide in socialist circles is based off where your income comes from, your relation to capital. if you have to work for someone else thats working class (proletariat), if you can be independent you are professional or middle class, if you own the means of production for others that makes you a capitalist. owning a house is only capital class if you rent it out.
from that pov almost all tech workers are professional or working class. with founder ceos its more complicated because they own capital but also work for themselves through their company so you can take them as either. i guess it depends on if you like that person.
"I define things so that I'm in the good set and _they_ are in the bad set".
It's also utterly deranged even when you just consider that most tech workers get compensated with stock.
Your incentives come from where your money comes from. This is a pretty basic concept and it's absurd to brush it off as a form of No True Scotsman.
You can get money from both labor and capital. This is called "middle class." Don't let it melt your brain, but don't oversimplify to "you owned a stock so are capital class" either. Just give the labor/capital percentages (ordinary income / capital gains) and note how it leans.
New grad tech worker: 100%/0%
Mid career tech worker: 50%/50%
Late career tech worker: 10%/90%
Retired: 0%/100%
They provided a decently accurate description of the working class vs the capitalist class. I don't think your reply fits here.
Most tech workers do not get compensated with stock. A fraction of the best compensated get stock. The next tier down get options with so many caveats that they are effectively worthless, and the tier below them are straight salary with no equity even entering the horizon for them.
And yea, once you start getting actual capital and start reaping the benefits of that wealth you start being identified as a capitalist in the socialist world view.
Edit: the comment I replied to originally had this sentence at the end
> Very typical for a certain type of folk. It's also utterly deranged even when you just consider that most tech workers get compensated with stock.
Eh? Which tech company doesn't give RSUs to fresh grads? Startups of course give options.
And how many american middle class+ (generalizing beyond tech workers) don't own equity?
Our corporation gives us worthless certificates for "money", that only pay out conditionally based on if the company gets re-evaluated for worth.
Our 401K match maxes out at $50 per paycheck.
You are in a bubble if you are surprised at the idea of companies not giving out stock, much less RSUs specifically. While it’s common in the big tech Silicon Valley companies there are thousands of other tech companies where the most they give are options, and I must repeat with a litany of caveats that make them effectively worthless, and even more where they only pay salary and have no way to gain equity at all.
I am in a lower tier of the market than Silicon Valley and after 15 years of making over six figure salary I have not been given a single stock, and none of my employees or members of my social circles that don’t work at FAANGs have either.