1. GDI = compensation of employees + gross operating surplus + gross mixed income + taxes – subsidies on production and imports
Compensation of employees encompasses the total compensation to employees for services rendered. Gross operating surplus, also known as profits, refers to the surpluses of incorporated businesses. Gross mixed income is the same as gross operating surplus, but for unincorporated businesses.
As you can see below, the share of net operating profit in GDI has gradually been growing from 21% (1970) to 26% (2014), but the share of compensation of employees has been declining from 58.4% (1970) to 52.2% (2014). The American consumers could increase the spending by borrowing more. After the financial crisis, share of the net operating profit in GDI has been noticeably growing while the share of compensation of employees has been noticeably falling. Most of recoveries went to the firms instead of the employees.
|Source: Bureau of Economic Analysis (BEA)|
The following chart demonstrates the total growth rates of components in GDP from 2009 to 2014. The net operating surplus increased by 35.8% while the compensation of employees only increased by 13.6% (3:1 ratio). While the firms seized 3, the employees only received 1.