One of the insights from Thomas Piketty’s book “Capital in the 21st Century” is that inherited wealth is growing in importance while wealth generated by labor is declining. And I quote:

When the rate of return on capital significantly exceeds the growth rate of the economy (as it did through much of history until the nineteenth century and as is likely to be the case again in the twenty-first century), then it logically follows that inherited wealth grows faster than output and income. People with inherited wealth need save only a portion of their income from capital to see that capital grow more quickly than the economy as a whole. Under such conditions, it is almost inevitable that inherited wealth will dominate wealth amassed from a lifetime’s labor by a wide margin, and the concentration of capital will attain extremely high levels – levels potentially incompatible with the meritocratic values and principles of social justice fundamental to modern democratic societies.

I’m in no position to replicate Piketty’s research, but I thought I’d take a narrow look at income in Minnesota over the past 60 years, and try to figure out whether income from capital (rent, dividends, interest, capital gains) is outpacing income from labor (wages, salaries, bonuses).

Again, this is not an attempt to refute Piketty’s claims, just an attempt to get a grasp on how one of the concepts has played out in our state.

Here’s what the data shows:

As you can see, labor's share of income is declining long term, and income from capital as a share of all income in Minnesota grew pretty quickly in the late 1970s and early 1980s, at the expense of labor. But capital's share of income has been flat since. What has grown is transfer payments, which are defined here. They are government benefits, including health care, and lots of other stuff.

So capital is producing a larger share of all Minnesota income than it was in 1953, but not as much as in 1983.

The data comes from the Bureau of Economic Analysis, whose data tools are powerful and easy to use. I recommend them. If anybody wants to see my spreadsheet, email me at

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