David G. The Raw Data
In our land of greed and fear, they say, “What gets measured gets managed.” This certainly rings true when one compares corporate profitability versus employee compensation.
As the chart above illustrates, after-tax corporate profits, the data series highlighted in blue, experienced a dizzying ascent from 1980 through 2021, climbing from 6.7% of GDP to 10.6% in 2022.1Corporate Profits After Tax (without IVA and CCAdj)/Gross Domestic Product | FRED | St. Louis Fed (stlouisfed.org)
Now, let’s turn our discerning gaze to the folks who make it all happen – we the people. Did we bask in the glorious glow of burgeoning corporate profits, or were those profits siphoned from our hard-earned pockets?
The same chart above demonstrates a diametric direction. Behold! Even with corporate profits skyrocketing by 58% since 1980, employee compensation (the sum of salary plus wages) as a percentage of GDP sagged by 10%, from 45.5% of GDP in 1980 to a meager 42.9% in 2021!2Compensation of Employees: Wages and Salary Accruals/Gross Domestic Product | FRED | St. Louis Fed (stlouisfed.org)
What does this mean? Brace yourselves for a short narration of numbers. I know, it’s math…
Some analytical context
In the distant past of 1980, U.S. GDP held at a humble $2.9 trillion. Fast forward to the year 2021, and voila! U.S. GDP rose 786% to a world-leading $25.7 trillion. Behold the chart’s real revelations:
- Absolute U.S. after-tax corporate profits, surged a mind-boggling 1302%, leaping from $194.3 billion in 1980 to the astronomical summit of $2.7 trillion in 2022. Yet, at the same time,
- Total employee compensation trickled upwards a mere 693%, roughly half the increase of corporate profits and smaller even than overall economic growth.
- Now, let this sink in: if employee compensation had kept pace with its 1980 glory, the average worker would be earning an extra $15.6K in 2022! Ah, the bitter symphony of missed opportunity. This is why so many are so angry about the economy!
This, dear friends, is the pièce de résistance of MSV capitalism. Shareholders, and their well-being, take the spotlight, leaving the all the rest of us scrambling for the crumbs trickling down from their largesse! This, my friends, is the grand illusion of trickle-down economics…
