[hash872]

I don't have time for a longer comment, but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates. The doctor, lawyer, financial advisor, CPA etc. that in past decades would have had his/her income run through a W2 arrangement shifted to becoming a one-person corporation

[hn_throwaway_99]

Do you have any evidence for this, at all?

[hash872]

Sure

https://www.brookings.edu/wp-content/uploads/2016/07/2013b_e... https://home.treasury.gov/system/files/131/wp-107.pdf https://eml.berkeley.edu/~yagan/LaborShare.pdf

[hn_throwaway_99]

Thanks very much for providing those sources.

That said, it's a huge pet peeve of mine when someone makes a statement, and then provides sources to back up that statement, but the actual sources contradict their original statement.

You stated "but AIUI this is mostly a statistical illusion caused by changes to US tax law- previously income that was attributed to 'labor' shifted over to LLCs/S corps for more beneficial tax rates." But then your very first linked article states "First, about a third of the decline in the published labor share appears to be an artifact of statistical procedures used to impute the labor income of the self-employed that underlies the headline measure."

I think there is a huge difference between 1/3 (while still a lot and an important factor) and what you wrote, "mostly a statistical illusion", especially since other substantial factors proposed in that article are things like offshoring.

[hash872]

I'm a bit skeptical that you absorbed these 3 pieces in the time it took you to respond (they are 27, 29, and 63 pages, respectively), but they find a range of effect sizes here- the other two a bit more strongly. I feel comfortable with my original statement, though I suppose there's always room for nitpicking

[hn_throwaway_99]

No, I completely read the first article. It was quite clear in what percentage of the decline in labor's share that it attributed to differences in statistical assessment of sole proprietors. I then looked at the abstracts of the other two. The third one basically completely agreed with the first ("We find that reallocating activity to the form it would have taken prior to the Tax Reform Act of 1986 accounts for 30% of the decline in the corporate sector labor share between 1978 and 2017."), and that's when I wrote my reply.

Frankly, I don't know how you can call this "nitpicking". In no definition in the English language is "one third" remotely the same as "mostly".

[hash872]

You read a 63 page paper today?

[cucumber3732842]

Sure matches my anecdotal experience.

How much of an effect it has at the national statistical level I'm not sure.

[saghm]

They seem to conveniently not have enough time to provide that in the comment

[prithvip]

Exactly. Crazy you are getting downvoted for having the most informed comment here. The other aspect of this is the rise of franchisees in America. Previously, the salary of the manager of a corporate store would be measured as labor income. In a franchise, it would be measured as capital income.

https://bfi.uchicago.edu/insight/research-summary/the-rise-o...