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July 31, 2017

Raking In Record Profits

Corporations Are Raking In Record Profits, But Workers Aren’t Seeing Much of It

By KEVIN DRUM

U.S. Companies Post Profit Growth Not Seen in Six Years

America’s largest companies are on pace to post two consecutive quarters of double-digit profit growth for the first time since 2011….Earnings at S&P 500 companies are expected to rise 11% in the second quarter, according to data from Thomson Reuters, following a 15% increase in the first quarter.

That sounds great! So does that mean worker pay has also posted strong growth? Let’s take a look:


I’ve used the employment cost index, which accounts for things like health care and other benefits, not just wages. And since corporate profits were down in 2015-16, I’ve used two-year growth rates, adjusted for inflation, to get a fair reading of longer-term earnings vs. pay.

As you can see, employee compensation growth roughly matched corporate profit growth in 2016, but in the first half of 2017 corporate profits have spiked while wage growth has been meager. Basically, corporations have manufactured profits by being stingy with workers.

I’m certainly happy to see businesses doing well. But I’d be a lot happier if this meant that workers were doing well too.

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