Why Are U.S. Corporate Profits So High? Because Wages Are So Low
January 27th, 2014Automation is the key, but this piece doesn’t mention it.
The companies have, “Still managed to boost profits beyond anything ever seen before because they’ve got away with employing as few workers as possible at as low a rate as possible.”
I’ve got news for Jamie McGeever at Reuters: Companies only ever employ as few workers as possible at as low a rate as possible.
How, then, are companies managing to keep increasing profits with fewer people?
Smart Machines: IBM’s Watson and the Era of Cognitive Computing by John E. Kelly III and Steve Hamm
Eventually, all of this hits the wall because there aren’t enough people with enough income to keep consuming stuff.
In any event, with one in seven people requiring the dole to avoid starvation in the U.S., I think it’s safe to say that we’re not going to get the Star Trek package when it comes to how all of the whiz-bang technology is impacting society.
Via: Reuters:
U.S. businesses have never had it so good.
Corporate cash piles have never been bigger, either in dollar terms or as a share of the economy.
The labor market, meanwhile, is still millions of jobs short of where it was before the global financial crisis first erupted over six years ago.
Coincidence?
Not in the slightest, according to Jan Hatzius, chief U.S. economist at Goldman Sachs:
“The strength (in profits) is directly related to the weakness in hourly wages, which are still growing at just a 2% nominal pace. The weakness of wages and the resulting strength of profits are telling signs that the US labor market is still far from full employment.
Companies have not been unable to raise prices much because of the economic recovery has been fragile. But they’ve still managed to boost profits beyond anything ever seen before because they’ve got away with employing as few workers as possible at as low a rate as possible.
