Labor, Land, and Capital: who get's what share of the pie?

From Bloomberg.com today:

Bush's Expansion Leaves Workers Behind, Sparking Fed Friction

Jan. 17 (Bloomberg) -- American workers have rarely taken home a smaller share of the nation's prosperity, a condition that is undermining bipartisan support for free trade and creating friction between President George W. Bush's administration and the Federal Reserve.

After 16 consecutive quarters of economic growth, pay is rising at a slower rate than in any similar expansion since the end of World War II. Companies are paying less of their cash gains in the form of wages and salaries than at any time since the Great Depression, according to government figures.

Such a disparity, partly the result of globalization of the labor market, helps explain why the Bush administration is struggling to muster support for lower trade barriers even with the jobless rate at a four-year low. The imbalance has also triggered a debate between Bush's Treasury Department and the Fed about how low unemployment can go without kindling inflation.

``There is no doubt that something is happening'' to reduce labor's share of income, says Robert Solow, a Nobel Prize- winning economist and professor emeritus at Massachusetts Institute of Technology in Cambridge. An economy that doesn't distribute its gains widely is ``poorly performing,'' he says.

What the statistics don't say is what happens when you subtract the growth in wages for those making over $100,000 from the meager growth in labor's wages. CEO pay rose 12% last year, for example. Things look a lot worse for the average Joe.