U.S. Corporate Profits So High Because Wages So Low–Duhh!

Wages Cap

A recent story on Reuters helps bolster what we’ve been saying here at The Everlasting GOP Stoppers for quite some time.

In his report, Jamie McGeever – a Chief Market Economist for Reuters – quotes chief Goldman Sachs U.S. economist Jan Hatzius as saying;

“The strength (in profits) is directly related to the weakness in hourly wages, which are still growing at just a 2% nominal pace. The weakness of wages and the resulting strength of profits are telling signs that the US labor market is still far from full employment.

Reuters used the following charts to point out the stark differences in corporate profits as they contrast against worker compensation;



Added Hatzius;

“The bottom line is that the favorable environment for corporate profits should persist for some time yet, and the case for an acceleration in the near term is strong. Hourly labor costs would need to grow more than 4% to eat into margins on a systematic basis. Such a strong acceleration still seems to be at least a couple of years off.”

This information comes at the same time that US Secretary of Labor Thomas E. Perez released the Bureau of Labor Statistics’ 2013 Union Membership Report. The report unequivocally shows that;

“…among full-time wage and salary workers, union members have  higher median weekly earnings than nonunion workers. The median weekly earnings  of union members were $950, compared to $750 for nonunion workers… Workers’  ability to form unions and engage in collective bargaining has been a cornerstone  of a strong middle class. The decline in union membership over the last few  decades has contributed to more working families struggling to get by.

So, while the New York Times recently called the current economic climate a golden age” for corporate profits, greedy corporations continue to rage against raising the minimum wage and continue to fight against allowing workers to organize.

Pissed off yet?


About eslkevin

I am a peace educator who has taken time to teach and work in countries such as the USA, Germany, Japan, Nicaragua, Mexico, the UAE, Kuwait, Oman over the past 4 decades.
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