Criticism
The main criticism of the wage share concept is simply that it does not accurately describe the share-out of income between employers and employees. The reason is that the incomes included in the ratio are those that conform to the concept of value added.
Compensation of employees is not the same as the disposable real income that workers get, and Operating surplus is not the same as real profits realised by enterprises. Consumption of fixed capital, another component of GDP, is measured at economic depreciation rates, which may diverge from real income obtained from depreciation write-offs. Finally, the indirect taxes net of subsidies included in GDP are only those regarded as direct imposts on production. In summary, GDP only very selectively measures total income flows - disregarding transfer income, property income and capital gains, land rents, subsoil rents and a fraction of net interest. As a result, the value of the share of wages in the product may be overstated, particularly if taxes on consumption increase as well.
Read more about this topic: Wage Share
Famous quotes containing the word criticism:
“Cubism had been an analysis of the object and an attempt to put it before us in its totality; both as analysis and as synthesis, it was a criticism of appearance. Surrealism transmuted the object, and suddenly a canvas became an apparition: a new figuration, a real transfiguration.”
—Octavio Paz (b. 1914)
“It is ... pathetic to observe the complete lack of imagination on the part of certain employers and men and women of the upper-income levels, equally devoid of experience, equally glib with their criticism ... directed against workers, labor leaders, and other villains and personal devils who are the objects of their dart-throwing. Who doesn’t know the wealthy woman who fulminates against the “idle” workers who just won’t get out and hunt jobs?”
—Mary Barnett Gilson (1877–?)