Another image of labor’s broken back: $48,887 in profit per employee!
This article via Yahoo news caught my attention: Five years into recovery, Dow Companies squeeze workers as investors thrive
I think this picture spells it out rather well.
“As the chart shows, the 30 huge companies that comprise the Dow Jones Industrial Average have barely nudged their employee ranks higher…”
But this is even more astounding:
Over the past five years, total profits of the current Dow 30 members surged by more than 42% through the end of 2014, to nearly $320 billion. This has driven the average annual profit per employee up by more than 34% since 2009, to $48,887.
According to this CNN article from August, the median household income is $53,891. That means these 30 companies are pocketing 90% of what an household earns. That’s out the door, cash in the pocket 90% of what a household works all year to earn. Now, I’m not sure, but I think that household income is pretax and I doubt they get to hid that $53,891 in some account out of reach of the tax man. In fact, I’ll bet that household needs every bit of that money just to get through the year.
Well, the 30 are not hiding all of it:
Dividends paid by the Dow 30 are up better than 30% the past five years, according to FactSet.
Read the article. The author does his best to explain this situation, but it’s seem more like excuses. A grasping at straws to dismiss what we know has been an intentional drive to get to this point. My interpretation of it is that these companies are now able to “grow” the pot of money without actually having to increase their sales. True money from money… but, they are scared that this magic will leave them and then what?
$48,887 PROFIT PER EMPLOYEE!
From the article: “The job market has tightened enough that glimmers of wage growth have been intermittently visible.”
My new one-note tune — just leave it to the US attorneys:
The ultimate – federally prosecutable — sweetheart labor contract may be no contract at all.
No one would doubt the criminality of a mob union boss and/or an employer threatening to fire workers for speaking out against a mobbed-up sweetheart contract – in order to obtain for themselves the pay and benefit moneys that might otherwise have gone to employees through fair bargaining practices. A for certain RICO or Hobbs Act target.
Why shouldn’t the exact same extortionate activity be view in the exact same extortionate light when union busting “consultants” and ownership threaten to strip away workers’ economic livelihoods should they dare to participate in a federally approved path to establish federally approved union bargaining rights?
US Attorneys — Criminal Resource Manual 2403
http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/crm02403.htm
In current (virtually universal) practice this economically — and by extension politically — ruinous extortion is “punished” only under administrative law laid down by the National Labor Relations Board — and employers found guilty pay only a (usually small) compensation for lost wages (not a penalty).
Alternate route: if any state independently outlaws this form of labor market extortion with a penalty of at least one year in prison, federal prosecution can automatically step in.
Your analysis is a little incorrect, since you are conflating household income (often 2 people working) with individual employee income. That being the case, the employers are actually pocketing a whole lot more than 90% of a person’s wages. maybe like in the 100+%
Carolamnie,
Yes, it may be 2 or more people. However, that number is presented as a simple comparison and nothing more. The 30 Dow companies are earing 90% of what the median household is earning.
Yes, it is indeed disturbing. That is roughly the same proportion I found when I looked it from another angle- starting with the average hourly productivity of American workers and cutting out hourly wages, taxes and benefits- http://politicsthatwork.com/graphs/division-of-productivity
Well, there certainly should be no question that the employees are NOT sharing in their increased productivity. Even a 50-50 split would mean a pay raise of something around 40% to 50%, at least for employees of the DOW 30.
What do you want to be that CEOs and top execs have received substantial raises most likely in that vicinity?
Of course, what is missing is a similar plot of employee salary.
Nathan,
That is an interesting chart you created. Nice way of looking at how the rewards for work are portioned. Interesting string of comments left there too.
Thanks! Yeah, a lot of the responses to that chart have surprised me. Higher wages is not as ubiquitous of a goal as I had assumed…
I’m sorry but I’m an old fashion Keynesian and believe in the circular flow of money. The real story here is not just broken labor. (That is high profits require not only low costs but also high spending – and if wages are low where is that spending coming from?) Maybe that explains why flat to floor base monetary expansion doesn’t work either.
Gee with employees being so darn profitable and all you wonder why they don’t need more of them.