Wednesday, April 07, 2004

Okay, ready for a mouthful? Here's a study whose title says it all: "The Unprecedented Rising Tide of Corporate Profits and the Simultaneous Ebbing of Labor Compensation--Gainers and Losers from the National Economic Recovery in 2002 and 2003". The title sorta says it all, except for a few statistics, which are coming right up.

In the Monday New York Times op-ed section, Bob Herbert reported on this study from the Center for Labor Market Studies at Northeastern University. He quoted the lead author:

"This is the first time we've ever had a case where two years into a recovery, corporate profits got a larger share of the growth of national income than labor did. Normally labor gets about 65 percent and corporate profits about 15 to 18 percent. This time profits got 41 percent and labor . . . got 38 percent."

The study said: "In no other recovery from a post-World War II recession did corporate profits ever account for as much as 20 percent of the growth in national income. And at no time did corporate profits ever increase by a greater amount than labor compensation."

In other words, an awful lot of American workers have been had. Fleeced. Taken to the cleaners.

And might I add: cheated, flim-flammed, bilked, done out of, gyped, chiseled, and clipped. Which is why I grind my teeth when David Brooks claims that:

Since 1995, the U.S. has enjoyed a productivity renaissance. Productivity gains cause standard of living increases.

Not quite. Productivity gains ought to cause standard of living increases.

Let's just review the stats once more. After other recessions the breakdown of gains went:

Labor: 65 percent
Corporate Profits: 15 to 18 percent

This time the gains are:
Labor: 38 percent
Corporate profits: 41 percent

The rich get richer and the poor get poorer.


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