Profits Hit All Time High - Wages Hit All Time Low

1) Corporate profit margins just hit another all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't. What they're suffering from is a myopic obsession with short-term profits at the expense of long-term value creation).

2) Wages as a percent of the economy just hit another all-time low. Why are corporate profits so high? One reason is that companies are paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are represent spending power for consumers. And consumer spending is "revenue" for other companies. So the profit obsession is actually starving the rest of the economy of revenue growth.

In short, our current obsessed-with-profits philosophy is creating a country of a few million overlords and 300+ million serfs.

That's not what has made America a great country. It's also not what most people think America is supposed to be about.

So we might want to rethink that.

Specifically, we might want to have the goal of our corporations be to create long-term value for all of their constituencies (customers, employees, and shareholders), not just short-term profit for their shareholders.

http://www.businessinsider.com/profits-at-high-wages-at-low-2013-4#ixzz2VLiGDsUp

Sal wrote:1) Corporate profit margins just hit another all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't. What they're suffering from is a myopic obsession with short-term profits at the expense of long-term value creation).

2) Wages as a percent of the economy just hit another all-time low. Why are corporate profits so high? One reason is that companies are paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are represent spending power for consumers. And consumer spending is "revenue" for other companies. So the profit obsession is actually starving the rest of the economy of revenue growth.

In short, our current obsessed-with-profits philosophy is creating a country of a few million overlords and 300+ million serfs.

That's not what has made America a great country. It's also not what most people think America is supposed to be about.

So we might want to rethink that.

Specifically, we might want to have the goal of our corporations be to create long-term value for all of their constituencies (customers, employees, and shareholders), not just short-term profit for their shareholders.

http://www.businessinsider.com/profits-at-high-wages-at-low-2013-4#ixzz2VLiGDsUp

I would think you'd be happy. After all, this is the result of the policies of President Barack Hussein Obama.

Markle wrote:
I would think you'd be happy. After all, this is the result of the policies of President Barack Hussein Obama.

Which ones of Hussein Obama's policies created this? And what policies did Willard Romney and Walker Bush have that would have put a stop to it? lol

I've listened to a whole lot of republican media (Fox News/talk radio), markle. And never in all my thousands of hours of listening to that have I ever heard anyone on there point out that what's revealed in this article is a bad thing. In fact, All I have EVER heard anyone on republican media say is that big wealth ALWAYS creates good better paying jobs for the rest of us.
So if this is all the fault of Hussein Obama's policies, the republican media has been engaged in the biggest coverup of that in the history of media.

Everything that happens in our government is planned by the Big Corporations and finalized by our Congress which sell votes for money, so called "Campaign donations."
I don't see how it can be changed.

Yella wrote:Everything that happens in our government is planned by the Big Corporations and finalized by our Congress which sell votes for money, so called "Campaign donations."
I don't see how it can be changed.

I don't know how either. But I do no one thing and it's that voting for democrats and republicans is never going to change it. Just as voting for democrats and republicans is never going to bring improvement to anything.

And I don't care if a dozen paid whores on MSNBC tell us differently, or a dozen paid whores on Fox News tell us differently. Which they all continually do.
Confucius said it doesn't matter how big the pile of elephant dung is or how big the pile of donkey dung is, we're still sitting in it.

Bob wrote:

Markle wrote:
I would think you'd be happy. After all, this is the result of the policies of President Barack Hussein Obama.

Which ones of Hussein Obama's policies created this? And what policies did Willard Romney and Walker Bush have that would have put a stop to it? lol

Which ones are not?

The public and companies are AFRAID to buy, hire, expand, or start a business. The reason is simple. There is total DISTRUST and UNCERTAINTY of this government. What this government will do next? What regulations are next? What business do they go after next?

$1 TRILLION wasted on the "Stimulus" plan further accelerated the downhill slide and, as we see now, simply delayed layoffs. Now Obama wants to kick the can down the road until after his election.

We have nearly $7 TRILLION in additional debt, in less than 5 years, with another TRILLION DOLLAR deficit having been PROPOSED by President Obama in 2012/ SOMETIME, it has to be repaid. When, how? Where does the money come from?

Buyers and businesses know that means staggeringly higher taxes just to pay the interest. They don't know when, on what, or how much. All we know is the Obama wants to punish those who have worked hard, played by the rules and been successful in order to reward those who have made bad decisions. He honestly believes that is “FAIR”.

The Cash for Clunkers program, a massive FAILURE and BILLIONS WASTED. Far fewer used cars means those on the market are priced higher, hurting low and middle income citizens the most.

The credit for first time home buyers FAILED and cost BILLIONS. Those who bought at that time and received a tax credit, paid more for their home and are now underwater.

President Obama PROMISED to give Card Check to the Unions which would cost all businesses more. They want to do away with the secret ballot. Again, no one knows if or when.

President Obama PROMISED that his energy programs would also "NECESSARILY CAUSE ENERGY PRICES TO SKYROCKET". President Obama also PROMISED that his energy programs would BANKRUPT coal powered plants. This would further economic damage in all coal producing states. He’s making good on that promise. How does a business plan or hire not knowing how far their energy prices will SKYROCKET? Who do higher utility costs hurt more? Low and middle income earners or high income earners?

Gas prices have doubled since he has been in office. Obama said $4.00 per gallon was okay, he just would have liked the price to rise more slowly. Gas was $1.89 per gallon when he took office and $3.55 per gallon today. Who does that harm most? Lower or middle income citizens or high income people? Does that help or hurt business?

ObamaCare, was crammed up the…throats of America AGAINST the wishes of the majority of voters. A large majority of voters still want the unaffordable unsustainable program REPEALED. ObamaCare adds TRILLIONS in further costs to employers…but, no one knows how much.

Now President Barack Hussein Obama has at least FOUR major scandals swirling about him with IRS and Benghazi being the most troublesome for him. IRS is neck deep in scandal and IRS is supposed to be running the boondoggle called ObamaCare.

Need more? So long as all this chaos is in the market place, we'll remain in this quagmire known, during the days of President Jimmy Carter. Then it was known as malaise.

There are many more reasons but those should get you started. Still can't figure out what Obama has done to cause more people to be living below the poverty level...REALLY?

Sal wrote:

Markle wrote:
I would think you'd be happy. After all, this is the result of the policies of President Barack Hussein Obama.

Wait ...

... I thought you said he was a socialist.

If he is, he's doin' it wrong.

lol

He's about as "socialist" as those corporation commies in China. Or about as "capitalist" as Romneycare.
Those words have now been so prostituted that they mean nothing anymore.

Markle wrote:

The public and companies are AFRAID to buy, hire, expand, or start a business.

The reason corporate earnings are high is because they've found lucrative markets for their goods outside the U.S.

http://www.businessweek.com/stories/2007-06-17/corporate-profits-an-overseas-engine-for-u-dot-s-dot-earnings

It's all a result of "globalism" which was given to us jointly by democrats and republicans, both in bed with the corporations. And when the democrats and republicans gave it to us, they both lied and told us the result of it would be more and better jobs in the U.S.
It's that simple.

Bob wrote:

Markle wrote:

The public and companies are AFRAID to buy, hire, expand, or start a business.

The reason corporate earnings are high is because they've found lucrative markets for their goods outside the U.S.

http://www.businessweek.com/stories/2007-06-17/corporate-profits-an-overseas-engine-for-u-dot-s-dot-earnings

It's all a result of "globalism" which was given to us jointly by democrats and republicans, both in bed with the corporations. And when the democrats and republicans gave it to us, they both lied and told us the result of it would be more and better jobs in the U.S.
It's that simple.

A six year old article explains zilch about today. I stand by my reasoning. There is utter chaos in the business world today, made worse by the ever expanding circle of massive scandals. That has just added more to the confusion. American voters did not want ObamaCare in the first place, still want it repealed and now they learn the corrupt IRS is going to who crams it down their throats.

Markle wrote:A six year old article explains zilch about today. I stand by my reasoning. There is utter chaos** in the business world today, made worse by the ever expanding circle of massive scandals.

** - record profits

Markle wrote:

A six year old article explains zilch about today.

How bout one from May 8 that now paints an even more dismal picture of the same thing.

http://articles.chicagotribune.com/2013-05-08/news/sns-rt-usa-taxesoveseasl2n0dp1uv-20130508_1_tax-holiday-foreign-earnings-bond-sale

http://www.progress.org/banneker/igt/cw/

It's not just how profits and earnings are taxed which is a real conundrum. It also very much involves where the big U.S. corporations are creating new employment and why and it's not in the U.S.

Here's you homework assignment so start reading.



https://www.google.com/search?q=corporations+hiring+overseas&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

In other words, it's all that "giant sucking sound" that Ross Perot predicted.
The same Ross Perot the democrats and republicans demonized as being "crazy". Even gave him a song by the same name as his theme song.

This is one of the best explanations of what has gone wrong with the American economy over the past three decades that I've read ...

Looking at the big picture, it's fairly obvious what has happened over the last 30 years. It has to do with a battle between the forces trying to raise wages, and the forces trying to raise assets. The asset side, of course, has won this battle in both parties. Enriching the wealthy through Reagan's trickle-down ideology was a symptom of the outcome of this battle, rather than the primary disease.
The real bipartisan agenda can be neatly summed up in this much overlooked but central Ronald Reagan quote from 1975:

"Roughly 94 percent of the people in capitalist America make their living from wage or salary. Only 6 percent are true capitalists in the sense of deriving income from ownership of the means of production...We can win the argument once and for all by simply making more of our people Capitalists."

....

Simply put, in the 1970s America was hit with an inflation crisis that quickly became a stagflation crisis. There were also oil shocks involved. Simulataneously, the world was becoming increasingly globalized, which made it more difficult for American corporations to compete using American labor. Finally, as Hacker and Pierson have persuasively argued, big business banded together to begin more aggressive and cohesive lobbying efforts. These four trends were devastating politically for the middle class.

American public policy on both sides of the aisle reoriented itself away from a focus on wages and toward a focus on assets. Specifically, the idea was that wage growth was dangerous because it led to core inflation in a way that asset growth did not. American foreign policy became obsessed even more than it had been with maintaining access to oil, both to prevent future oil shocks and to prevent inflationary oil spirals. Wage growth was also dangerous because it would drive increasing numbers of American corporations to employ cheaper overseas labor.

But that left the question of how to sustain a middle class and functional economy while slashing wages. The answer was to make more Americans "true Capitalists" in Reagan's terms. Pensions were converted to 401K plans, thus investing about half of Americans into the stock market and creating a national obsession with the health of market indices. Regular Americans were given credit cards, allowing them to take on the sorts of debt that had previously only been available to businesses. Most crucially, American policymakers did everything possible to incentivize homeownership, from programs designed to help people afford homes to major tax breaks for homeownership and much besides.

Low prices on foreign-made goods were also a policy priority. This had a dual benefit for policymakers: lower prices offset stagnant wages, while keeping core inflation low. Free trade deals were also a major centerpiece of public policy in this context. Few politicians actually believed that these deals would help increase wages and jobs in America. But what they were designed to do is keep low-cost goods coming into America, while increasing the stock value of American companies exporting goods overseas, thus raising asset values.

Low interest rates were also important. Renters and savers suffer in a low-interest rate environment, but borrowers and asset owners do very well. Tax cuts, of course, are also helpful in offsetting the impact of wage stagnation.

Houses and stocks, then, are assets that rise independently of wages. Low-cost overseas goods and the easy availability of loans and credit provide offsets to low wages. Low interest rates and tax cuts help as well keep assets afloat as well. The bipartisan idea from a public policy standpoint was not simply to enrich the wealthy at the expense of the middle class. The idea was to make the American middle class dependent on assets rather than wages. I was at a conference many years back, the purpose of which was to bring corporate bigwigs together in defense of free trade against what they feared might be a protectionist backlash. One executive told me point blank that if only enough Americans were invested in the stock market, they wouldn't gripe about Halliburton and other similar companies because they would say, "Hey, I own part of that company!" When I objected that that only half of Americans were invested in the market at all, and of that figure far fewer had significant assets invested, he retorted that more Americans were invested in the market than I thought, and that policy needed to be designed to push more Americans to invest.

On its face, the idea is insane. In a capitalist system, assets do often rise in value. But they also decline, and often sharply. Without significant wage growth and redundancies in the economy that provide stability at the expense of efficiency for asset growth, the popping of economic bubbles produces Great-Depression-style economic pain. The only way an asset-based economy can work is if assets grow reliably forever into the future. Not even the most "pro-growth" policies can promise that. In fact, those policies usually inflate bubbles that ensure just the opposite.

.....

The recklessness and stupidity of this sort of approach to public policy should have been proven by the 2008 financial crisis that saw the rapid destruction of asset values in stocks, bonds, and housing. Predicating economic health on asset growth is a pipe dream: most people will never have enough assets to make it work, and asset growth is far too unstable to serve as the basis for a functional economy.

Whether they can articulate it or not, what has most progressives most incensed about the Obama Administration's domestic policy is that it has ultimately hewed to the same asset-based economic model. When the Administration could be progressive on cutting costs or ensuring equality without negatively impacting assets, it did so. That's what the ACA, the Ledbetter Act, the repeal of Don't Ask Don't Tell and numerous other left-leaning Administration moves were designed to do. But the Administration has been very reticent to take any actions that would negatively impact the value of assets.

America will only return to real economic health when the asset-crazed insanity of the last 30 years is brought to heel, and America returns to a public policy that is far more interested in wage growth and economic stability than it is in asset inflation. Until then, we can expect continued political and economic shocks from an angry electorate and an economy that has run off the rails due to 30 years of deeply misguided anti-inflation, pro-asset-growth ideology.

http://digbysblog.blogspot.com/2011/10/wages-versus-assets-by-david-atkins.html

You can't have record profits when EBITDA is not at record levels without squeezing workers.

This is the key sentence in that, Sal...

the world was becoming increasingly globalized, which made it more difficult for American corporations to compete using American labor.

As the rest of the world began to emerge from a 3rd world status, it began to give our economic engine competition. It mainly did it with cheap slave labor.
The really scary thing about this for us is, that it may be that there is no "solution" to this other than our gradual economic decline. And it may be something that we just have to live with for the foreseeable future.

One thing's for certain. The democrat and republican rhetoric spewed on Fox News and MSNBC is useless to us.

The various economic bubbles and the tech revolution have helped provide a cushion against this and delayed the decline.
But the bubbles have burst. And the natural evolution will begin to shift the tech revolution to these emerging nations.
I see nothing on the horizon anymore to offset the decline from here on.

When the shit will really hit the fan is when the emerging world economies themselves provide enough consumer market for the goods they produce that they don't need us as their market anymore.
That's when this country will become something you no longer want to live in.

Corporate profits hit a 60-year high in 2011, right as the effective corporate tax rate hit a 40-year low. America’s largest companies, in fact, haven’t paid the full corporate tax rate in 45 years, and 26 have avoided taxation altogether for the past four years. At the same time, business leaders have lobbied Congress to reform the corporate tax code by adopting a territorial tax system that would exempt most foreign profits from American taxation, making it even easier for the companies to shift profits, investments, and jobs overseas.

One analysis found that a territorial system would lead to the creation of 800,000 jobs in other countries that otherwise could have been created in the United States. An alternative tax reform that closes corporate loopholes that lead to the offshoring of profits and jobs wouldn’t bring the tax rate back to historical levels, but it would still generate roughly $168 billion in revenue over the next decade.

http://thinkprogress.org/economy/2013/03/27/1781921/corporate-tax-rates-lobbying/?mobile=nc

FOR MARKLE:

from Forbes:

3rd Quarter Corporate Profits Reach Record High -- Worker Pay Hits Record Low: So How Exactly Is Obama The 'Anti-Business' President?

The numbers are in for Q3 and big business has $1.75 trillion worth of reasons to celebrate as these record-breaking results improved on last year’s numbers by a stunning 18.6 percent—the largest after-tax profit quarter in the nation’s history.
And that’s just for openers as total Q3 profits broke another record by accounting for a huge 11.1 percent of the U.S. economy.

Yes, it is, indeed, good to be a king of corporate America.

But do you know who doesn’t have it quite so grand?

The American worker—that hard working employee who, according to CNN Money, citing newly published government reports, has seen his or her wages dip to an all-time low as a percentage of GDP during the most recent quarter—

“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.(emphasis added) But overall economic growth has greatly outpaced growth in hourly wages and job creation since the end of Great Recession, so workers’ share of the economic pie has dropped steadily. That’s despite the fact that modest hiring by employers lifted total wages to a record $6.88 trillion in the third quarter.”

Is anyone surprised that record low wages arrive at the very same time profits reach record highs?

“That’s how it works,” says Robert Brusca, economist with FAO Research in New York . “If one gets bigger, the other gets smaller.”

Well…yes…that is pretty much how it works. With CEO pay increasing 27 times faster than worker pay since 1978—a substantially greater increase than the value of corporate equity as measured by the growth of the stock market during the same period and far more substantial than the measly 5.7 percent growth in employee wages over the same time frame— the stellar profit numbers should not come as a great surprise to anyone.

They do, however, give rise to a few questions.

For starters, how in the world can the GOP and Wall Street continue to pitch the whole “Obama: Enemy of Business” narrative in view of these record-breaking results? Either the “anti-business” Obama is completely powerless when it comes to fulfilling his supposed goal of bringing big business to its knees or taking down the corporate elite was never really the objective of this allegedly socialist President after all and this was all just a myth.

It should be clear by now that the second option more than fits the reality.

Either way, it has become completely clear that it is as ridiculous for corporate America to continue this line of attack as it is ridiculous to continually blame the Obama administration for policies that are, supposedly, hampering small business when the Q3 results make it all too clear who is truly to blame for Main Street’s difficulties.

When wages fall to record lows as a percentage of GDP, it means that middle-class Americans have fewer disposable dollars in their pocket to support the small businesses dependent upon those dollars for their own survival. By dropping all the money to the bottom line, rather than fairly compensate employees, big business is racking up the bigger than ever bucks at the expense of the nation’s small businesses.

And while corporate America can continue to achieve record profits by shipping jobs overseas as they put a severe clamp on the earning potential of their domestic workers (while enjoying ever-rising productivity by these workers), small business is, indeed, left holding they bag. You see, that store owner on Main Street cant ship jobs overseas to save money. Their profits must come from customers with money to spend.

So, as we congratulate corporate America on their record-breaking profits, let’s be mindful of who is paying the price for their good fortune—the American worker and the small business owner who is being starved out of business due to the ever shrinking paychecks being delivered on payday.

If that works for you, fine. But enough already with the silly suggestions that we have a President who is anti-business or that it is the Obama administration that is putting a noose around the neck of small business.

If all-time record profits for big business is the result of the administration’s ‘anti-business’ agenda, maybe the White House can throw a little of that anti-magic at the middle-class as life appears to turn out rather nicely when this President takes a position in opposition.

http://www.forbes.com/sites/rickungar/2012/12/04/3rd-quarter-corporate-profits-reach-record-high-worker-pay-hits-record-lowso-how-exactly-is-obama-the-anti-business-president/2/