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This decline is discernible in Canadian data, but it is much less apparent than it is south of the border. For one thing, the current labour share is similar to what it was 15 or even 30 years ago, and it did follow the usual pattern of rebounding during the recession. But if you were to draw a line through the Canadian data over the past 35 years, you’d see a downward trend.

It is customary to greet almost any new development in the economy with alarm, and the decline in the labour share is no exception. The decline has occurred in conjunction with an increase in the share of income going to the top end of the income distribution and many have gone on to conclude that the shift of income from labour to capital is at least partly to blame for increasing income inequality. Old habits die hard: capitalists are still equated with high incomes and workers are still equated with low incomes.

To be fair, those habits were ingrained by centuries of economic history. Up until very recently, the only way to generate high incomes was to own a lot of capital and wages were so low that it was almost impossible for workers to save much. In a world where wages are barely above subsistence levels and in which only the rich owned capital, a shift of income from labour to capital will exacerbate income inequality.

But that’s not the world we live in now. The high earners in the U.S. and Canada are, for the most part, working for a living: their surging incomes are driven by the salaries they earn, not the assets they hold. If there is a link between profits and the high salaries earned by certain corporate executives, the story directly contradicts the narrative in which the shift of income from labour to capital increases income concentration. If corporate executives are using their position to siphon off profits before they can be distributed to shareholders, this reduces the share of total income going to the owners of capital. The problem would be a labour share that is too high, not one that is too low.