Vox article with insights into labor share

Here is a link to an article at Vox which includes insights and wisdom into the effect of falling labor share globally.

Monetary Policy and Long-term Trends


“There has been a long-term downward trend in the share and strength of labour in national income, which is depressing both demand and inflation.”

“… So, the trend weakness in returns to labour will simultaneously tend to hold down consumption, output, and inflation …”

“This coincidence of a declining wage share and declining real interest rates is not, we believe, accidental.”

“From a short-term, business cycle viewpoint, a conjuncture of sluggish output growth and low inflation, surprising on the downside, should be met with and rectified by more expansionary monetary policy. But if one accepts the hypothesis that a (perhaps the) longer-term driver of such a conjuncture is the relative weakness of labour as a factor of production, then this short-term response is unhelpful, indeed somewhat counterproductive, in a longer-term context. Its main effect is to raise asset prices, and the relative value of land and capital, and thus benefit their owners, who are rich, rather than workers, who are poor.”