In an Opinion piece by Harold Meyerson, he quotes Michael Cembalest, chief investment officer of J.P. Morgan Chase, as saying
...the fact that profit margins (the share of a company’s revenue that goes to profits) of the Standard & Poor’s 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.This is no surprise. It has been reported in many places that corporations are doing quite well, thank you. They are sitting on tons of cash and profits are up. Good evidence that money and profits do not create jobs, but I digress.
So, why are corporations doing so well despite being overwhelmed with taxes, regulations, uncertainty, unions, health care costs, etc, if you believe republicans, anyway?
Well, again, according to Cembalest,
Why the increase? “There are a lot of moving parts in the margin equation,” Cembalest writes, but “reductions in wages and benefits explain the majority of the net improvement in margins.” This decline in wages and benefits, Cembalest calculates, is responsible for about 75 percent of the increase in our major corporations’ profit margins.He asserted in the July 11 edition of “Eye on the Market,” the bank’s regular report to its private banking clients, if you are interested in more details.
Or, to state this more simply, profits are up because wages are down.
So why have wages and benefits declined? Meyerson suggests that "the great majority of American employers no longer have to sit down and hammer out collective bargaining contracts with their workers has contributed to the increase in profits at wages’ expense. And many of those employers want to keep it that way."
"In the real America, union elections have declined 80 percent since 1970, as employers have become adept at delaying and opposing — often by illegally threatening their workers with job loss — their employees’ attempts to unionize. In the America of 2011, there are scarcely any union organizing campaigns. There are fewer union members: Just 7 percent of private-sector employees are unionized, down from 35 percent in the 1950s. And what was the last strike you recall? The strike as a bargaining tool for workers is now the province of professional athletes, the last American employees who have enough clout even to contemplate taking a walk."
Wow! Athletes! That's what we have come to. You have to be a worker making a million dollars a year to be able to go on strike.
Corporations have neutered the workers. They are fat and happy. Now they are poised to take over the government. Welcome to the New America.