Compensation versus dividends

Chart and table showing the allocation of us national income to compensation of employees and to dividends from 1946 to 2008. Data are shown in current us dollars, in constant 2008 dollars after elimination of inflation, and as indexes for 1946 = 100 to allow for comparisons of growth behaviour. In billions of us dollars, net dividends grew from 6 (current us$) or 49 (constant us$) in 1946 to 690 in 2008, at an average annual growth rate of 8.1%. (current us$) or 4.4% (constant us$). Compensation of employees grew from 120 (current us$) or 1046 (constant us$) in 1946, to 8042 in 2008, at an average annual growth rate of 7% (current us$) or 3.3% (constant us$). From 1946 to 1966, dividends and compensation grew at the same rate of 4.1%. From 1966 to 1988, dividends grew at an annual rate of 3% and compensation at a rate of 3.3%. From 1988 to 2008, dividends grew at a rate of 6.1% and compensation at a rate of 2.6%, all for values adjusted to constant 2008 us dollars.

Rise and Fall of Employee Compensation.
From 1946 through 2008 in the US, employee compensation rose at the pace of 3.3% per year, while remuneration of capital (dividends paid to stockholders) moved up at 4.4% per year. A closer look at the data shows that employee compensation went through 3 clear-cut phases:

1946-1966: Post-war equilibrium. During this period, remuneration of both labour and capital moved up at the same speed, an average annual growth of 4.1%.
1966-1988: The economic surge, the relative scarcity of labour and the effectiveness of workers' unions caused remuneration of labour to grow a bit faster than dividends, i.e. 3.3% against 3% per year.
1988-2008: Financial capital prevails over labour. While compensation grows at an annual rate of 2.6%, the lowest of the three phases, dividends grow at an annual rate of 6.1% or 2.3 times faster.

Business delocalisation, a significant factor of growing unemployment, is often rationalised as the inevitable reaction to unaffordable labour costs, but it may instead stem from the imposition of high thresholds for dividends throughout the industry. It is not the rising costs of labour that cause the problem, but the requirement for a rising remuneration of capital.

Growth of Net Dividends¹ and Compensation² of Employees USA 1946 - 2008
Year	Net Dividends	Compensation of employees	Net Dividends	Compensation of employees	Net Dividends	Compensation of employees
Year	(Billion current US$)		(Billion constant³ 2008 US$)		(Index, 1946=100)
1946	6	120	49	1,046	100	100
1947	6	130	50	1,027	102	98
1948	7	142	52	1,061	107	101
1949	7	142	54	1,063	110	102
1950	9	155	65	1,150	133	110
1951	9	181	59	1,254	121	120
1952	9	196	58	1,333	119	127
1953	9	210	60	1,412	122	135
1954	9	209	62	1,392	126	133
1955	11	226	69	1,476	140	141
1956	11	245	71	1,546	146	148
1957	12	258	72	1,576	146	151
1958	12	260	69	1,553	142	148
1959	13	281	75	1,662	152	159
1960	13	296	78	1,729	160	165
1961	14	305	80	1,761	164	168
1962	15	327	85	1,862	174	178
1963	16	345	91	1,944	186	186
1964	18	371	101	2,056	206	196
1965	20	400	110	2,176	225	208
1966	21	443	110	2,345	224	224
1967	22	475	110	2,441	225	233
1968	24	524	116	2,584	236	247
1969	24	578	114	2,713	232	259
1970	24	617	108	2,753	221	263
1971	25	658	106	2,797	217	267
1972	27	725	109	2,953	223	282
1973	30	811	115	3,131	236	299
1974	33	891	117	3,151	240	301
1975	33	949	107	3,067	218	293
1976	39	1,059	119	3,238	243	309
1977	45	1,180	129	3,392	263	324
1978	51	1,335	136	3,585	278	343
1979	58	1,499	143	3,715	291	355
1980	64	1,648	146	3,743	297	358
1981	74	1,820	153	3,780	313	361
1982	78	1,920	152	3,758	310	359
1983	84	2,036	157	3,834	321	366
1984	91	2,245	165	4,075	336	389
1985	98	2,412	172	4,249	351	406
1986	106	2,558	183	4,409	374	421
1987	112	2,736	188	4,582	384	438
1988	130	2,954	210	4,784	429	457
1989	158	3,131	247	4,886	503	467
1990	169	3,326	254	4,998	519	478
1991	181	3,438	262	4,989	535	477
1992	188	3,647	266	5,170	544	494
1993	203	3,791	281	5,257	574	502
1994	236	3,981	320	5,407	653	517
1995	254	4,179	338	5,560	691	531
1996	298	4,388	389	5,729	793	548
1997	331	4,669	425	5,990	867	572
1998	352	5,024	446	6,374	910	609
1999	337	5,349	422	6,687	861	639
2000	378	5,789	462	7,084	944	677
2001	371	5,979	444	7,156	906	684
2002	399	6,111	470	7,196	960	688
2003	425	6,368	490	7,341	1,000	702
2004	550	6,708	617	7,520	1,259	719
2005	557	7,060	605	7,659	1,234	732
2006	705	7,476	740	7,854	1,511	751
2007	768	7,863	784	8,031	1,601	768
2008	690	8,042	690	8,042	1,408	769
Average annual growth rate	8.1%	7.0%	4.4%	3.3%	4.4%	3.3%
¹ Dividends paid by corporations located in the US and abroad to stockholders who are US residents less the dividends received by US corporations.
² Wages and salaries, and supplements such as employer contributions to employee pension and insurance plans and to government social insurance.
³ Adjusted for inflation using the Implicit Price Deflators for GDP.

Sources: see BEA - US Bureau of Economic Analysis (Dividends Paid and Received by Sector; Personal Income and Its Disposition; Implicit Price Deflators for Gross Domestic Product 1929-2008).

areppim: information, pure and simple

Growth of Net Dividends¹ and Compensation² of EmployeesUSA 1946 - 2008

Year

Net Dividends

Compensationof employees

Net Dividends

Compensationof employees

Net Dividends

Compensationof employees

Growth of Net Dividends¹ and Compensation² of Employees
USA 1946 - 2008

Compensation
of employees

Compensation
of employees

Compensation
of employees