Third quarter numbers show that U.S. corporate profits have hit a record high while workers’ wages are now at their lowest share of GDP (again). Why again? See, corporate profits are like Batman movie ticket sales. Every time the new numbers come out they’re bigger than the last ones.
Just four years after the great recession corporations are back to beyond full strength while wages are more stagnant than a fat man’s arteries. This comes as no surprise to “economists”:
“That’s how it works,” said Robert Brusca, economist with FAO Research in New York, who said there is a natural tension between profits and the cost of labor. “If one gets bigger, the other gets smaller.”
This oversimplification misses the point entirely: the degree to which corporations are profiting is so extreme that wages could very easily be on the fast rise and companies would still be flush.
According to last week’s Gross Domestic Product report, corporate earnings were $1.75 trillion during the third quarter. Despite the insistence by the Far Right that the corporate tax is too high, a laughable assertion, corporate after-tax profit now represents the greatest percentage of GDP in history. Profits accounted for 11.1 percent of the economy last quarter. During the height of the recession that number had fallen to 4.6 percent.
The corporate growthsplosion came largely from the financial sector, according to the New York Times:
Domestic profits of financial corporations rose $71.3 billion in the third quarter, after falling $39.7 billion in the second. Domestic profits of nonfinancial corporations, on the other hand, decreased $1 billion in the third quarter, after rising $27.8 billion in the second quarter.
Despite a modest increase in hiring by employers, economic growth has greatly outpaced growth in hourly wages. Workers are now crowded around their lowest share of the economic pie to date:
A separate government reading shows that 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.