The US – Capital’s Share Of Output At An All Time High, Part 2
Following on from the blog of 14 February 2013, I have been asked by a number of readers why I think Capital’s share of output as it all time high, and conversely why “Labour’s share of output has, in recent years, declined from 70% to 64%”.
I think there are three significant factors at work.
1. Globalisation has seen a structural decline in Western World manufacturing. The declining price of manufactured goods, in real terms, has ensured a weak bargaining positioning for labour. In Australia, for example, the Manufacturing Sector as a percentage of all workers has declined from 19% to only 9%, in the past thirty years;
2. Technology has driven productivity growth, particularly in the Services Sector. Again, in Australia the Services Sector as a percentage of all workers has grown from 73% to 85%, in the past thirty years; and
3. The combination of Globalisation and Technology has reduced the relevance of Trade Unions. The graph below, from Smithers & Co. Ltd, compares Unionisation with Strike Action in the US. Both are currently at an all-time low. In the US the percentage of employees that belong to a trade union has halved since 1978 to 12%. In Australia the percentage of employees that belong to a trade union has declined by two-thirds from 55% in 1983 to 18% today.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
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