I’m out of town today so just a short post.
I’ve written various posts over the years looking at the labour share of income and how that has changed over time in New Zealand, and how what has gone on in New Zealand compares with other OECD countries (eg here). My story – just using the official data – has been a relatively positive one, if labour shares actually tell one much (one can envisage an alternative set of outcomes in which productivity growth has been much faster, the labour share of national income was lower, but most people were still better off than in the actual underwhelming economy we’ve lived in).
We don’t have these data quarterly, so the annual national accounts release a few weeks ago gave us the once a year update. Here is total (economywide) compensation of employees as a share of three measures of the size of the economy.
(The indirect tax and production subsidies adjustment is because, say, raising GST raises nominal GDP/GNI/NNI, but doesn’t generate any more production/value in the economy to share around.)
The picture no longer seems quite so encouraging. When I first did charts of this sort three years or so ago, I focused on the share of GDP. There had been an increase in the labour share and things now seemed to be holding steady. For example
But with subsequent revisions to the data to 2016, and the new provisional data for the more recent period there has been some slippage even in the labour share of (adjusted) GDP. But GDP isn’t a good measure of effective income available to New Zealanders. It includes depreciation, which is simply about maintaining the existing capital stock. And includes the portion of the economy’s production that accrues to foreigners (mostly interest and profits).
It seems to me that the ratio of compensation of employees to net national income (NNI), adjusted for indirect taxes and production subsidies, is probably the most sensible whole-economy measure. And on that measure there had been a pretty substantial increase in the labour share of New Zealanders’ net income in the 00s, but quite an unwinding again this decade.
I’ve previously shown charts illustrating that New Zealand wage rates appear to have been rising faster in New Zealand than nominal GDP per hour worked (the best quarterly proxy for the economy’s overall “ability to pay”). I argued that that was consistent with – another way of expressing – the idea of a high, fundamentally overvalued, real exchange rate. Since the quarterly GDP series is being substantially revised late next week, there is no point updating that chart right now. But it will be interesting to have another look – including at the annual version using, eg, the NNI data – when the GDP data have been released. Most likely, those data will show a bit more productivity growth in the last few years, but the “a bit more” is likely to pale in comparison with the extent of the productivity underperformance over decades.
Fix that – which might involve the government, Opposition, and official agencies taking the problem seriously – and most New Zealanders would be materially better off, whatever the aggregate labour share.
croaking cassandra 
My wife got back from a trip to Auckland, she said “I don’t like Auckland”. You need a level of income and wealth to like Auckland. Wallace Chapman “loves everything about Auckland (but he would). If much of the country is unlivable (too expensive and an assault to the senses) labour share of income isn’t worth much?
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Wonderful place Auckland. I really like it here but I am on a $200k wage could be a reason why. Not too sure why economists complain of the lack of pay increments to match housing costs. When I arrived in NZ, 30 years ago my first pay was $30k.
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It’s all relative
I grew up in Mt Roskill, went to Dominion Rd Primary and Mt Roskill Grammar
It was wonderful. Now I wouldn’t go back – look what they’ve done to it
We know you live there
From November 2012 on Interest.co.nz
I stand on the top of Mt Roskill (puketepapa) from where I can see all the cones, the Maori forts, Mt Albert, Mt Eden, One Tree Hill, Three Kings and The Manukau. You didn’t need Chinese interpreters. There were no brothels or gambling dens then
Duke St is two streets past Dominion Rd Primary
Now its a hot bed of gambling dens and brothels
read about it
–https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10844822
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My first house in NZ, 30 years ago was on Duke Street. It was mainly state houses and I would not quite call it a wonderful neighbourhood. Woke up one morning to a row of police cars because someone dumped a dead body in a park nearby.
When I first bought investment properties off May Road, agents thought I was crazy and told me the place was a dump with Samoan and Tongan gangs in regular drunken fights. Some of my tenants were hospitalised and I had to lodge complaints for the Police minister to have more regular patrol cars. I was fortunate in those days, the Police Minister actually took an interest and directed the police to take a more active interest in stopping the violence in the nearby parks. My weekends were spent painting over graffitti.
These days hundreds of brand new developments have sprung up and the Indians are building 6 bedroom mansions in Mt Roskill or little India. Even the old state houses are making way for the governments brand new state owned higher density terrace housing developments.
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Wake up it is Dec 2019 and not Sep 2012.
You can still stand on top of Mt Roskill(little India) to see all the cones(the Unitary Plan Viewshafts guarantee no buildings above 3 levels), the Maori forts, Mt Albert, Mt Eden, One Tree Hill, Three Kings and The Manukau. You probably will need Chinese, Indian, Somalian, Tongan, Samoan interpreters.
Duke St is two streets past Dominion Rd Primary, now with a dozen more 6 bedroom mansions and the givernment has brand new state owned 2 level retirement terrace houses.
They closed the brothel and replaced that with brand new 6 bedroom indian mansions and chinese mah jong gambling dens is a common form of social gambling
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If we wanted a FTA with Europe(once the UK Brexits) or with the US they would argue that our Foreign Exchange rate was too low and we have an unfair trade advantage rather than too high.
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Wake up – This is 2019 …..
Technology is now New Zealand’s third largest export sector
Unfortunately the benefits are bypassing the public sector
It is December 2019 and we still await the GDP numbers for the September Quarter. In 2018 NZ’s tech sector was worth $11 billion, with the majority ($8 billion) coming from technology export businesses. Notably, agritech and blockchain
This is from an NZ Government site which says
“Pity nobody really knows about it outside New Zealand”
–https://www.nzstory.govt.nz/news/technology-is-now-new-zealands-third-largest-export-sector/
NZ government established a pilot Payday Filing system in 2018 and went live May 2019 – cannot find any information on how it’s going and why the government can’t release macro summaries of total wages paid and hours worked
Compare – This was written in 2008
robots in a trading environment
Bandwidth – a market-maker’s privilege.
Prime-brokers are moving their data-centres as close to the exchange as possible as speed is critical. Nano-seconds are vital. Network connections from the exchange are arteries with veins feeding off to data-vendors, brokers, traders etc. The main pipe (artery) or backbone is 1mb speed/bandwidth while distribution veins are 500kb speed/bandwith. Data is transmitted as packets down the main pipe. With natural latency, a 1mb connection at the front of the network has first access to data, while the furthest 500kb connection has last dig at the data. When dealing in nano-seconds, if the market-maker is at the front of the queue with a high speed connection, detects a sudden move in the underlying instrument, they, the market-maker is able to react and move their order away, or withdraw, before the last in the queue even knows about it. With any reticulation system, the further from the source, the service diminishes. One privilege exchanges can provide is to allocate first connection to the market-maker. While the market-maker cannot “see” packets of other traders passing through, they have first access to any changes in the physical index, and changes to the market-depth not generated by themselves. Have seen it happen. Observed that one night on Sycom. There were 10 on the offer, 5 points above the bid. One lot tried to hit the offer. The offer disappeared, the re-offer came back 1 point higher, with a re-bid at the previous offer price. The market-maker was able to move the 10 offer, instantly. The three data transactions happened simultaneously. The very best retail software and hardware cannot beat this
Nano-seconds are billionths of a second
milliseconds are millionths of a second
Try pinging croakingcassandra.com to see the number of hops and the time taken
Ping croakingcassandra.com
It takes 200+ milliseconds for a round trip to wordpress from my wi-fi network
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I got Internet Fibre connected by Chorus last week. 2 Filipinos who decided to run the line as an overhang between the branches of a tree. I had to have the tree cut down otherwise they will make me pay for the down line in the next wind storm. They really should bring in migrant workers with some common sense.
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