Friday, March 29, 2024

The damage was done by 1980

Revisiting mine of 26 July 2013, the second graph from that post. Here updated:

Compensation of Employees relative to Interest Paid in the US economy
This graph at FRED

Employee compensation falls from 6½ times the cost of interest (in 1960) to about 2 times the cost of interest (in 1980). Compensation remains low until the financial crisis. It is now in the neighborhood of 4 times the cost of interest -- less than two-thirds the 1960 level.

The damage to compensation was done before 1980. The ratio rises since the financial crisis, not because compensation rises but because interest rates fall.

Where, oh where did the money go--
An interesting question, no?

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