CORPORATE PROFITS WAY UP, WAGES STILL SUCKING WIND
December 04, 2012
(NATIONAL) -- Has it been a while since you’ve had a raise? And of the raises you have seen in the last decade or more have you noticed they haven't in any sense kept pace with the rising cost of living?
Do you keep wondering when the average American worker’s pocketbook will start doing as well as corporate profits?
There does not seem to be a handy answer to that question but what is known is that just four years after the Great Recession – many people felt it as the second Great Depression, not a recession - U.S. corporate profits are stronger than ever.
It is fat-fat city for many big companies these days.
CNN Money reports that in the third quarter this year, corporate earnings were $1.75 trillion and that is up a beefy 18.6% from a year ago.
Those numbers are from last week's gross domestic product report and the numbers mean that after-tax profits jumped to their greatest percentage of GDP in history.
The downside: those record profits come at the same time that workers' wages have fallen to their lowest-ever share of GDP.
The American worker is stuck behind a gasping, creaky 1930’s style bus with mouth firmly wrapped around a rusted tailpipe and sucking stale fumes for wages.
"That's how it works," Robert Brusca, economist with FAO Research in New York tells CNN Money.
He says there’s a “natural tension” between profits and the cost of labor. "If one gets bigger, the other gets smaller."
Profits accounted for 11.1% of the U.S. economy last quarter, compared with an average of 8% during the previous economic expansion. They fell as low as 4.6% of GDP during the recession.
Corporate profits took a big hit in the recession like everything else, but they've seen a massive bounce back, according to the report.
But no big bounce back in wages. Just an increase in the density of those bus fumes.
In fact, total wages have now fallen to a record low of 43.5% of GDP.
Until 1975, wages almost always accounted for at least half of GDP, and had been as high as 49% as recently as early 2001.
But overall economic growth has literally zoomed past growth in hourly wages and job creation since the end of Great Recession, so the man and woman on the street’s share of the economic pie has dropped steadily.
Brother can you spare a dime?
More on that story here