Steven Rattner

June 30, 2016

Is Capitalism Working?

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Agenda

Jobs

Wages

Income Inequality

Corporate Short-termism

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Jobs

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Jobs Picture Has Been Strong

Source: BLS

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But Labor Force Participation Is Falling

Source: BLS, CEA

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The Missing Prime-Age Men

Source: OECD

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Less Educated More Likely To Drop Out

Source: CEA, BLS

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Gig Economy Is Growing But Still Small

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Source: JP Morgan Chase Institute, BLS

…But Barely Register Among Self-EmployedGig Workers Have Been Increasing…

Wages

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Wages Should Track Productivity

Note: Data are for average hourly compensation of production/nonsupervisory workers in the private sector and net productivity of the total economy.Source: EPI

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Incomes Now Appear To Be Rising

Source: Sentier Research

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$56,853

But Wage Data Confusing

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Note: All figures are for production workers only and are adjusted for inflation.Source: BLS

Corporate Profits Near Records

Source: Standard and Poor’s, Goldman Sachs

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9.5%

Why Have Corporate Profits Risen While Wages Have Mostly Stagnated?

Principal causes:

Globalization

Technology

Secondary causes:

Tax policy

Declining unionization

“Winners-take-all” labor market

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Income Inequality

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US Leads in Income Inequality

*2013 or latest available. Gini coefficients are post taxes and transfers.Source: OECD

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US Does Less to Redistribute Income

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Note: Data is for households with people under 60 only.Source: Janet Gornick, Luxembourg Income Study 2013

Are Companies Too Short-Term?

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Capital Returns Are Rising

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Note: Figures are for S&P 500 companies only.Source: Carlyle Group, Greg IP, WSJ

Business Spending Better Than Perception

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Source: BEA

Business R&D Is Near Record Highs

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Source: BEA

1.76%

Firms With More R&D Are Rewarded

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Note: R&D spending as reported by 239 of the largest global 500 companies since 2012. Data is through May 2015.Source: Bloomberg, Matthew A. Winkler

251%avg growth*

69%avg growth

36%avg growth

-8%avg growth

Thank You For Listening

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