[Marxism] CORPORATE profits are at their highest level in at least 85 years. Employee compensation is at the lowest level in 65 years.
lnp3 at panix.com
Sat Apr 5 07:20:46 MDT 2014
to see accompanying graph.
NY Times, APRIL 5, 2014
Corporate Profits Grow and Wages Slide
Off the Charts
By FLOYD NORRIS
CORPORATE profits are at their highest level in at least 85 years.
Employee compensation is at the lowest level in 65 years.
The Commerce Department last week estimated that corporations earned
$2.1 trillion during 2013, and paid $419 billion in corporate taxes. The
after-tax profit of $1.7 trillion amounted to 10 percent of gross
domestic product during the year, the first full year it has been that
high. In 2012, it was 9.7 percent, itself a record.
Until 2010, the highest level of after-tax profits ever recorded was 9.1
percent, in 1929, the first year that the government began calculating
Before taxes, corporate profits accounted for 12.5 percent of the total
economy, tying the previous record that was set in 1942, when World War
II pushed up profits for many companies. But in 1942, most of those
profits were taxed away. The effective corporate tax rate was nearly 55
percent, in sharp contrast to last year’s figure of under 20 percent.
The trend of higher profits and lower effective taxes has been gaining
strength for years, but really picked up after the Great Recession
temporarily depressed profits in 2009. The effective rate has been below
20 percent in three of the last five years. Before 2009, the rate had
not been that low since 1931.
The statutory top corporate tax rate in the United States is 35 percent,
and corporations have been vigorously lobbying to reduce that, saying it
puts them at a competitive disadvantage against companies based in other
countries, where rates are lower. But there are myriad tax credits,
deductions and preferences available, particularly to multinational
companies, and the result is that effective tax rates have fallen for
The Commerce Department also said total wages and salaries last year
amounted to $7.1 trillion, or 42.5 percent of the entire economy. That
was down from 42.6 percent in 2012 and was lower than in any year
Including the cost of employer-paid benefits, like health insurance and
pensions, as well as the employer’s share of Social Security and
Medicare contributions, the total cost of compensation was $8.9
trillion, or 52.7 percent of G.D.P., down from 53 percent in 2012 and
the lowest level since 1948.
In profit and compensation calculations, presidents are given credit for
years in which they served for the majority of the year. Stock market
gains reflect Standard & Poor’s 500 price changes from inauguration to
end of term. For President Obama, they are through March 31. Recession
shading indicates the economy was in recession during all or part of the
year shown. *No figure is given for 1932 and 1933, which were years of
Benefits were a steadily rising cost for employers for many decades, but
that trend seems to have ended. In 2013, the figure was 10.2 percent,
the lowest since 2000.
One way to look at the current situation is to compare 2013 with 2006,
the last full year before the recession began. Adjusted for inflation,
corporate profits were 28 percent higher, before taxes, last year. But
taxes were down by 21 percent,so after-tax profits were up by 36
percent. At the same time, total employee compensation was up by 5
percent, or less than the 7 percent increase in the working-age
population over the same period.
Several reasons that have been offered as explanations for the declining
share of national income going to workers, including the effects of
globalization that have shifted some jobs to lower-paid overseas workers
and the declining bargaining power of unions.
The accompanying charts compare President Obama’s administration with
each of his predecessors, going back to Herbert Hoover. After-tax
corporate profits in President Obama’s five years in office have
averaged 9.3 percent of G.D.P. That is a full two percentage points
higher than the 7.2 percent averages under Lyndon B. Johnson and George
W. Bush, previously the presidents with the highest ratios of corporate
The stock market has reflected that strong performance. Through the end
of March, the Standard & Poor’s 500-stock index was up 133 percent since
Mr. Obama’s inauguration in 2009. Of the 13 presidents since 1929, only
Bill Clinton and Franklin D. Roosevelt saw a larger total increase. On
an annualized basis, the Obama administration gains come to 17.7 percent
a year, higher than any of the previous presidents. The figures reflect
price changes, and are not adjusted for dividends or inflation.
More information about the Marxism