Henry Blodget, the editor of Business Insider, rounded up a monster chart slideshow under the headline "Here's What the Wall Street Protesters Are So Angry About..." It's a pretty brilliant production. But his conclusion -- that wages' falling share of GDP explains the Occupy Wall Street movement -- is missing some important context.

Blodget walks readers through the last 30 years in income inequality, from the rise in bank profits to the unemployment bomb.  He calls his class slide "the one overarching reason the Wall Street protesters are so upset" The big reveal: Wages as a percent of the economy [are] basically the lowest ever."

Here is that graph.

And so, in conclusion, we'll end with another look at the "money shot"--the one overarching reason the Wall Street protesters are so upset: Wages as a percent of the economy. Again, it's basically the lowest it has ever been.

This is an important, but misleading graph. Here's what this picture tells you: Wages (think: paychecks) have fallen from 51 percent of the economy to 44 percent of the economy in the last 50 years. That sounds like total salaries have cratered.

But here's what this graph leaves out: Compensation as a share of the economy hasn't changed more than a percentage point since 1960.

This sounds like a paradox. It's not. There's a big difference between compensation and wages. Compensation is what the boss pays to have you work. It includes your health care, pension benefits, and employer contributions to Social Security, Medicare and other government programs. As it turns out, all those things have increased from about 4.5 percent of the economy in 1960 to about 11 percent of the economy is 2009. As a result, they have eaten into wages.*


Blodget is making the argument that corporate profits stole your raise. But it's more likely that health care stole your raise. Health care and other benefit costs have more than doubled as a share of GDP since 1960. Corporate profits have not.


"Health care stole your wages" is not meant to be a final and complete explanation of middle class stagnation. No such explanation would fit in five words. The last 30 years are too complicated. But as much as cost-cutting CEOs, fabulously rich bankers, and quarterly-profit-driven corporate boards are contributing to middle class anger, it is equally true that something faceless and seemingly harmless is robbing the middle class. The cost of health care and other workplace benefits.

It's strange to think of health care robbing anyone, since health care is a benefit, if not a legal or moral right. But it is. Companies and government promised to workers and families a modicum of medical services, and those services are getting expensive faster than the economy is growing. The reason why (which is too multivariable to spell out conclusively here) has to do with the way we tax health care, the way we regulate insurance, the barriers to entry in pharma, the cost of medical school, the wages of doctors ... in short, a lot of things that have very little to do with Wall Street.

I'm not asking somebody to start an Occupy Aetna movement. Instead, I'm saying that some crises have culprits without faces or corporate logos. The protesters have a good point. In fact, they have several good points. But their questions have answers that are too long to fit on a placard.


*To be clear, I think Blodget is right. I just think he picked the wrong chart to explain why he is right. His most important chart (besides the obvious ones about unemployment being so high today) is the one showing average hourly earnings flat over 50 years. A lot fewer people would care about banker salaries if their salaries were increasing.

After adjusting for inflation, average hourly earnings haven't increased in 50 years.