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:
“I, with other Americans, have perhaps unduly resented the stream of criticism of American life ... more particularly have I resented the sneers at Main Street. For I have known that in the cottages that lay behind the street rested the strength of our national character.”
—Herbert Hoover (1874–1964)
“Nothing would improve newspaper criticism so much as the knowledge that it was to be read by men too hardy to acquiesce in the authoritative statement of the reviewer.”
—Richard Holt Hutton (1826–1897)
“However intense my experience, I am conscious of the presence and criticism of a part of me, which, as it were, is not a part of me, but a spectator, sharing no experience, but taking note of it, and that is no more I than it is you. When the play, it may be the tragedy, of life is over, the spectator goes his way. It was a kind of fiction, a work of the imagination only, so far as he was concerned.”
—Henry David Thoreau (1817–1862)