Mike Wilson: The Other Type of Income Inequality
Thoughts on the Market
Morgan Stanley
4.8 • 1.4K Ratings
🗓️ 13 January 2020
⏱️ 4 minutes
🧾️ Download transcript
Summary
On today's episode, Rising labor, regulatory and cyber security costs are weighing heavily on many small caps. Is corporate income inequality as urgent an issue as individual inequality?
Transcript
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| 0:00.0 | Welcome to Thoughts on the Market. |
| 0:04.3 | I'm Mike Wilson, Chief Investment Officer and Chief U.S. Equity |
| 0:06.9 | strategist for Morgan Stanley. |
| 0:08.4 | Along with my colleagues bringing you a variety of perspectives, I'll be talking |
| 0:11.7 | about the latest trends in the financial marketplace. It's Monday, January. of |
| 0:13.4 | perspectives. I'll be talking about the latest trends in the financial marketplace. It's Monday, January 13th at 9 a.m. Eastern |
| 0:16.8 | so let's get after it. Income inequality is a hot topic. The top 20% has done exceptionally well over the past several decades, while the average American has not kept pace. |
| 0:26.5 | Though this is a political issue, it's also an economic one. |
| 0:29.5 | As legend has it, Henry Ford paid his workers more so they could afford to buy his cars. |
| 0:34.4 | Whether that was his real goal or just good PR, paying employees a better wage is good for |
| 0:38.8 | the economy, if not the bottom line. |
| 0:41.3 | American workers did pretty well during the second half of the 20th century with regard |
| 0:44.9 | to getting their fair share, but in 2001, labor's share of profits began to drop sharply. |
| 0:50.4 | What happened? |
| 0:51.4 | While I wouldn't attribute a decline to just one factor, a big driver was globalization. |
| 0:55.2 | Companies also faced increasing pressure to be more efficient in a world of deflationary pressures. |
| 1:00.6 | Since 2012, employee compensation has improved as the economy recovered from the financial crisis, |
| 1:07.0 | labor markets tightened, and workers got more of the pie. |
| 1:10.0 | We've also seen a backlash against globalization and income concentration. |
| 1:14.3 | This push has resulted in legislation to increase the minimum wage by 20 to 50 percent in many states |
| 1:19.9 | with inflation index increases in the future. |
| 1:22.6 | We've written a great deal about the rise in labor costs over the past year |
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