Working Families Lose As Corporate Profits Soar

There were 5.37 million people who fell into poverty from 2000 to 2005; during the same time, there were 6.8 million more people without health insurance..

And the average wage of new jobs created in this decade is more than 20 percent below the average wage of jobs lost...

All these developments occurred when the economy was growing, worker productivity was increasing, and corporate profits reached a forty-year high..

Unlike previous recoveries, this time working families are not gaining ground. The share of national income going to workers is the lowest on record, while the share of national income going to corporate profits is the highest on record.
The Center on Budget and Policy Priorities reported that as of 2006, wages and salaries paid to workers as a percentage of GDP stands at the lowest level on record, 51.6 percent. The share of income going to corporate profits was the highest on record at 13.8 percent.

In fact, slow wage growth is boosting corporate profits. According to Goldman Sachs, slow growth in labor compensation explains 64 percent of the increase in profit margins over the past year, and "the most important contributor to higher profit margins over the last five years has been a decline in labor's share of national income."

(Bill Clinton, Giving: How Each of Us Can Change the World (New York: Alfred A. Knopf, 2007), pages 192-193)

Comments (1)

Walker Daniels

There is a link today from yahoo finance to Minyanville. It's a pay site so the link may get broken. Kevin Depew talks about what he calls "The Crisis of the Real." This site is devoted to finance and Kevin is talking about the credit crunch that is gripping the finance sector.

What he is saying is that people everywhere are rejecting debt because debt no longer represents anything real. In fact, the things people used debt to buy are no longer real things or even simulations of real things but "pure simulacrum," copies without models, imitations without antecedents.

The dream of home ownership with its attendant fantasies of family, comfort, and security can no longer be realized. Instead, there are buildings on property with prices that bear no relation to their intrinsic worth. The buildings are adorned with plastic siding and windows and the whole package comes with debt that cannot be repaid.

The stages of descent into unreality go like this:

1) Once there was an idea of home and the idea reflected the reality.
2) Then the idea of home came to mask the fact that the reality was profoundly changing.
3) Then the idea of home concealed the absence of any coherent reality behind the notion of home.
4) Finally, the idea of home exists as a "pure simulacrum" without any relation to reality at all.

If I thought that my home represented nothing but debt, I'd walk away from it too. Don't be too quick to dismiss Kevin's analysis. Sure, he's writing from a kind of Ivory Tower down there on Wall Street. On Main Street maybe we're lucky to have any place to lay our heads.

But he's right in that corporate America has fundamentally altered the nature of home. After WWII it became a bastion of the middle class. In just the last 7 years it has become a corporate profit center. Corporations have squeezed everything that can be gotten from the bastion of the middle class, taken even the idea of home. All that's left is a mountain of debt.

Posted by Walker Daniels | April 9, 2008 7:11 PM

Posted on April 9, 2008 19:11

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