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07/26/2011 10:29:54 AM · #1 |
An interesting read, sure to provoke some debate :-)
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Corporate Americaâs Chokehold on Wages
July 19, 2011, Washington Post
If youâre wondering why American consumers are still flat on their backs, rendering the economy similarly supine, the answer is both fundamental and simple: Itâs not just that so many of them are unemployed. The ones who are employed are also underpaid.
Donât take my word for it â take that of Michael Cembalest, the chief investment officer of J.P. Morgan Chase. He asserted in the July 11 edition of âEye on the Market,â the bankâs regular report to its private banking clients, that âUS labor compensation is now at a 50-year low relative to both company sales and US GDP.â
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Full piece here.
R. |
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07/26/2011 11:23:18 AM · #2 |
| "profit margins... of the Standard & Poorâs 500 companies are at their highest levels since the mid-1960s, despite the burdens of health-care costs, environmental compliance and other regulations that are presumably weighing down these large companies." So if "job creators" are booming and tax cuts have been in place, then unemployment should also be at the lowest levels since the 1960's. Yeah... so much for that lie. Most jobs are created by small businesses that bear an increased tax burden when the wealthy and major corporations don't pay their share. Why are Republicans using 90% of Americans as human shields in their war against allowing tax cuts that they promised would be temporary to expire when it's so blindingly obvious such cuts do not lead to the results they claim? They're either incredibly stupid or unbelievably greedy. |
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07/26/2011 12:14:54 PM · #3 |
| I believe that they are both incredibly stupid andunbelievably greedy. Period. Some people are not even paying attention to all that's going on right now. Watching Bonehead Boner ruffle his feathers and strut makes me wish for things I've never wished on another human being. None of them good. |
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07/26/2011 01:39:08 PM · #4 |
The actual graph for profit margins can be found in the PDF here (halfway down the first page).
It doesn't look so dire. And while I don't have a ton of compassion for corporations, I'd only listen to the objections of the person who likewise objected that corporate profits were too low in the 1990s.
Personally I don't see much of a way around this. Welcome to the global market. Instead of white-collar workers living in a certain neighborhood and blue-collar workers living in another, we have grown that to white-collar being in certain countries and blue-collar in others. If you happen to be stuck in the wrong country, you are going to get squeezed. I see no way around a corporation taking advantage of disparities in currencies between countries. |
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07/26/2011 03:43:35 PM · #5 |
Bear, you're a hell of a photographer, and I admire your photography tremendously. But I doubt your conclusions as an economist.
US labor is low relative to sales and low relative to US GDP. Lets say I accept these statements as true ... and I actually believe they are true.
This is because of two factors: 1) Labor will always decline as a percent of sales when we replace labor with machines (which we continue to do); and 2) US labor will decline as a percent of sales when foreign labor replaces US labor (which continues to happen). Same for GDP.
It's not corporations screwing workers. It's about vastly increased productivity brought about by machine-based production. And it's about importing higher labor content stuff from lower labor cost countries. In our global world, lower cost foreign labor can compete against higher cost domestic labor. So more and more of the labor content of Sales is provided from other countries reducing US labor content of Sales.
It's not some grand conspiracy. It's not evil intent or greed on the part of American tycoons. (Or EU tycoons for that matter since the same thing is happening there too.) And it is also offset to some degree by US businesses paying taxes that are the highest in the world ... which redistributes a bunch of corporate wealth through increasingly social spending.
There are no flames in this post. No shrieking conservatism or pro-business pig headedness. Just a level voice pointing out some things in hopes of creating perspective. |
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07/26/2011 04:54:18 PM · #6 |
Originally posted by Dr.Confuser:
Bear, you're a hell of a photographer, and I admire your photography tremendously. But I doubt your conclusions as an economist. |
I did not express an opinion, far less a conclusion. I posted the piece to spark discussion, I found it an interesting read. The author's position, as far as I'm concerned, is as full of holes as a good Swiss cheese.
R. |
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07/26/2011 05:03:19 PM · #7 |
Originally posted by Dr.Confuser:
And it is also offset to some degree by US businesses paying taxes that are the highest in the world ... which redistributes a bunch of corporate wealth through increasingly social spending. |
U.S. businesses DO NOT pay the highest taxes in the world. Not even close. The statutory rate may be high, but the tax code guarantees that large companies never pay anywhere near that rate. In fact, corporate taxes are at a historic low, as are taxes in general. Many of the most profitable companies in America, despite earning billions, actually pay nothing in federal taxes after all the deductions and credits. And spending? Yeah, that one's a myth, too. According to the Congressional Budget Office, combined federal spending for Social Security, Medicare, Medicaid and all other spending plus interest represented 17.2% of GDP in 2010 compared to 18.4% in 2000, 21.8% in 1990, 21.6% in 1980, and 19.3% in 1970. Sure, spending is up dramatically dollar-wise, but you could say the same thing about how much I spend on gasoline compared to 2000. It doesn't necessarily mean I've been driving more. |
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07/26/2011 05:17:59 PM · #8 |
Originally posted by scalvert:
According to the Congressional Budget Office, combined federal spending for Social Security, Medicare, Medicaid and all other spending plus interest represented 17.2% of GDP in 2010 compared to 18.4% in 2000, 21.8% in 1990, 21.6% in 1980, and 19.3% in 1970. Sure, spending is up dramatically dollar-wise, but you could say the same thing about how much I spend on gasoline compared to 2000. It doesn't necessarily mean I've been driving more. |
But surely we can all agree that with the first baby-boomers retiring this % is only going to go up for the next 20 years. Right?
Do you have a link for that? It seems suspect if only for the fact that Medicare and Medicaid are bound to have risen faster than inflation in the last 40 years so the only way the % stays stable is if the SS % goes down substantially. |
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07/26/2011 05:22:10 PM · #9 |
Originally posted by Bear_Music:
Originally posted by Dr.Confuser:
Bear, you're a hell of a photographer, and I admire your photography tremendously. But I doubt your conclusions as an economist. |
I did not express an opinion, far less a conclusion. |
You opined it was 'interesting' and concluded it was 'sure to provoke some debate' - That's good enough for me. :-D |
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07/26/2011 05:28:57 PM · #10 |
Originally posted by JH:
Originally posted by Bear_Music:
Originally posted by Dr.Confuser:
Bear, you're a hell of a photographer, and I admire your photography tremendously. But I doubt your conclusions as an economist. |
I did not express an opinion, far less a conclusion. |
You opined it was 'interesting' and concluded it was 'sure to provoke some debate' - That's good enough for me. :-D |
Well, I guess... LOL... If it floats your boat, as my daughter would have said... but I didn't draw a conclusion "as an economist", that's for sure. The man who wrote that piece is one of the strongest pro-union advocates in America, and I'm far from that. I've watched, in my lifetime, unions evolve (or is that "devolve"?) from being a positive power for economic equality into being, pretty much, a negative, and arguably a corrupt, force. It bothers me to say this, but unions seem to me to be, by and large, increasingly irrelevant at best and disruptive of a stable economy at worst. So I'm not even close to being sold on this guy's world view; but he's discussing some very interesting phenomena that we are going to have to deal with as we move forward.
Assuming we do, of course... move forward, that is; our current status seems to be more of a tailspin than anything else.
R. |
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07/27/2011 12:59:40 AM · #11 |
Originally posted by Bear_Music:
Originally posted by JH:
Originally posted by Bear_Music:
Originally posted by Dr.Confuser:
Bear, you're a hell of a photographer, and I admire your photography tremendously. But I doubt your conclusions as an economist. |
I did not express an opinion, far less a conclusion. |
You opined it was 'interesting' and concluded it was 'sure to provoke some debate' - That's good enough for me. :-D |
Well, I guess... LOL... If it floats your boat, as my daughter would have said... but I didn't draw a conclusion "as an economist", that's for sure. The man who wrote that piece is one of the strongest pro-union advocates in America, and I'm far from that. I've watched, in my lifetime, unions evolve (or is that "devolve"?) from being a positive power for economic equality into being, pretty much, a negative, and arguably a corrupt, force. It bothers me to say this, but unions seem to me to be, by and large, increasingly irrelevant at best and disruptive of a stable economy at worst. So I'm not even close to being sold on this guy's world view; but he's discussing some very interesting phenomena that we are going to have to deal with as we move forward.
Assuming we do, of course... move forward, that is; our current status seems to be more of a tailspin than anything else.
R. |
Okay, NOW you've earned your Economist wings. |
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