Via Suzy Khimm here is a chart on labor’s share of corporate value added.

It’s declining and quite frankly when I look out in the world I see pressure for it to decline further.

This means that real wages must fall. However, for real wages to fall inflation needs to rise. This is part of the problem that the developed world is facing generally.

In addition, this is why folks will be shocked when inflation begins to rise significantly before wages do. The are implicitly assuming this relationship will be stable but it will not be. Inflation will go into supporting ever higher corporate profits.

However, that dynamic is a real dynamic. Stopping it by tightening monetary policy will only spread the suffering and cause more unemployment and slower growth.

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