The Post-COVID Decline in the Labor Share - Liberty Street Economics

A look at the decline of the labor share of income that occurred post-COVID, comparing its dynamics to declines in earlier periods.

Richard Audoly, Miles Guerin, Srinidhi Narayanan, and Rachel Schuh The labor share of income in the U.S. is currently at its lowest-ever level in the post-war period. The labor share measures the fraction of economic output paid to workers as wages and salaries. As such, it is a useful benchmark for wage growth: when the labor share falls, it means that productivity, prices, or both are growing faster than wages. After much-studied drops in the 2000s, the labor share fell sharply again after the COVID pandemic. In this post, we compare the dynamics of the labor share post-COVID to earlier…

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• Aadharsh Pannirselvam
• Binit Maharjan

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