Why Workers Are Losing to Capitalists

Back in April, I wrote about one of the most troubling mysteries in economics, the falling labor share. Less of the income the economy produces is going to people who work, and more is going to people who own things.

This trend is worrying because it contributes to increased inequality -- poor people own much less of the land and capital in the economy than rich people do. The devaluation of workers could also increase unemployment, social unrest and general malaise. No one would like to see capitalism transform into the kind of dystopia envisioned by Karl Marx. That’s why even though the decline in labor’s share has so far been relatively modest, economists are racing to diagnose the cause before the problem gets any worse.