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February 2012, Week 4

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Sun, 26 Feb 2012 22:39:25 -0500
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Corporate Margins And Profits Are Increasing, 
But Workers' Wages Aren't
By Pat Garofalo
Think Progress
February 22, 2012
http://thinkprogress.org/economy/2012/02/22/430190/corporate-profits-wages-2012

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."

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