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PeakTrader said...

When the millionaire CEO of VF/H.H. Cutler (one of the world's largest apparel companies) was asked if the 28-cent-an-hour wages they paid in Haiti was a subsistence wage, he stated:

“Well, the workers are alive, aren’t they?"

Fortunately, the U.S. isn't Haiti. Nonetheless, there's an inverse relationship between profits and wages. U.S. profits have been soaring, while U.S. real wages have been flat:

S&P 500 May Reach Cheapest Level Since 1980s
Jan 10, 2011

Companies in the S&P 500 are estimated to earn $92.75 a share this year, according to a Bloomberg survey of 11 strategists at Wall Street’s biggest banks. While that would exceed the record profit of $85.32 a share in 2007, the strategists forecast the S&P 500 will end 2011 at 1,384, 12 percent below its all-time high of 1,565 on Oct 9, 2007.

Real Minimum Wage

The period 1997-2007 is the longest period during which the minimum wage was not adjusted. The minimum wage increased in three $0.70 increments--to $5.85 in 2007, $6.55 in 2008, and to $7.25 in 2009.

In real 2010 dollars, the 1968 minimum wage was the highest at $10.10.

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VangelV said...

Profits are not really soaring. If the banks have to account for their losses you would be seeing a significant real decline for the S&P 500. If you can't figure that out you have trouble seeing the way things are.

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PeakTrader said...

VangelV, U.S. corporations had a record 20 consecutive quarters of double-digit earnings growth in the 2000s.

Also, you can see the upward trend in U.S. corporate profits and proprietor's income (payments to owners for their labor), since the 1980s, as a percentage of GDP on page 21 of National Economic Trends by the Federal Reserve Bank of St Louis.

Perhaps, firms should have the option of either paying their taxes on profits to the government or to their employees (e.g. as bonuses), to compensate for depressed market wages.

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