Workers or Profits? American Businesses Chose a Long Time Ago.

A post from Dean Baker prompts me to show you the following chart:

Corporate profits go up and down with the business cycle, but averaged 5-6 percent of GDP on a pretty steady basis through 2002. Then things changed. Since 2002, profits have increased dramatically, and today stand at about 9 percent of GDP. Now take a look at a chart showing median wage income for workers:

It’s a mirror image. Up through 2002, wage income was rising. Not a lot, but the trend was generally upward. Since 2002, however, wages have been dead flat.

Baker estimates that a change in corporate earnings of 4 percentage points is about equal to $4,000 per person in annual earnings. That accounts almost precisely for the change in the trendline. Corporate profits have increased about $600 billion more than the previous trend, while median earnings have increased about $600 billion less than the previous trend. This is not a coincidence. Now one final chart:

It’s the same inflection point. So here’s the story:

  • Since 2002, corporations have been retaining much higher profits than they used to.
  • They could do this because they stopped giving their employees annual raises.
  • As a result, the number of women joining the labor force began declining. (The number of men in the labor force was already declining, and this trend continued.)
  • Businesses then began complaining that they couldn’t find enough qualified workers.

There are qualified workers out there. At least, there would be if more of them had been given stronger incentives to join or stay in the labor force. But they weren’t because CEOs and shareholders wanted more money for themselves. Now they’re stuck.

Corporate America can either pay its executives more or it can pay its workers more. It’s their choice. But if they choose to stiff workers and rake in more profits for themselves, they need to quit griping when a few million of those same workers decide to stay home instead of taking the jobs they have on offer. Most people can’t afford to make that choice, of course, but there are always a few percent at the margin who can. And they have.

WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

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That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

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Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

payment methods

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