Corporate Margins and Profits are Increasing, But Workers’ Wages Aren’t

– We have no shortage of proof that things are not right and that the vast majority of us are being slowly and inexorably disadvantaged by the power and financial structures around us.   And that those who’ve managed to gain control of those structures are becoming richer and richer as we become more impoverished.

– The ‘controllers’ are smart.  They know that revolutions are quite unlikely while the oppressed still have full bellies.   So, even as we get poorer in terms of what our wages can buy us, we are guided into ever more soporific satiation with the media spectacles on TV and in the movies, with ever yet cheaper junk that fills the shelves of our monster WalMart and Warehouse stores.  

– We think the political debates raging in the media are about reforming the growing injustices but they are, in fact, mere stick sword fights between the tweedle-dees and the tweedle-dums put up in the political Gamelan shows to confuse us.

– The biggest game in town is the flow of riches to the few and the slow impoverishment of the rest.   But most of us haven’t seen it yet and we go on in our lemming ways rooting about for a slightly better rate on our house mortgage or a slightly better price on the next box of crackers we buy at the market.

– Someday, the awareness of what’s happening will finally grip the majority of us and the consequences will be dire.  But, until then, we remain asleep in the midst of a planet wide robbery spree.

– dennis

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As we’ve been noting, corporate profits have made it back to their pre-recession heights (even if corporate tax revenue hasn’t followed suit). In fact, in 2011, corporate profits hit their highest level since 1950. But as Bloomberg News noted today, this hasn’t translated into wage growth or more purchasing power for workers:

Companies are improving margins and generating profits as wage growth for the American worker lags behind the prices of goods and services…While benefiting the bottom line for businesses, the decline in inflation-adjusted wages bodes ill for the sustainability of economic growth as consumers may eventually be forced to cut back. […]

Of the 394 companies in the Standard & Poor’s 500 Index that have reported since Jan. 9, earnings for the quarter ended Dec. 31 increased 5.1 percent on average and beat analyst estimates by 3.2 percent. Some 70 percent of the companies have posted better-than-projected results.

This pattern has become all too familiar during the slow economic recovery. In fact, real wages fell in 2011, despite record corporate profits. “There’s never been a postwar era in which unemployment has been this high for this long,” explained labor economist Gary Burtless. “Workers are in a very weak bargaining position.”

Between 2009 and 2011, 88 percent of national income growth went to corporate profits, while just 1 percent went to wages, a stat that is “historically unprecedented.”

– To the original…


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