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This just in: Unions not the problem ~ Corporate America is greedier than ever!

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I recently wrote about one of the things that has gone wrong in the U.S. economy namely, that big American corporations are no longer sharing enough of their vast wealth with their rank-and-file employees.

To illustrate this, I included the two charts below.

The first chart shows that big American companies now have the highest profit margins in history.

The second chart shows that the companies are now paying the lowest wages in history as a percent of the economy.

If you happen to be an owner of a big American corporation, these charts could be construed as good news: You're coining it!

If you happen to be a rank-and-file employee, however or someone hoping to be such an employee this is bad news: You're sharing less than ever before in the success of American industry.

Wages To GDP

Business Insider, St. Louis Fed
This situation, by the way, is only temporarily good news for the company owners. Because, by pumping so little back into the economy in the form of employee wages (and capital investments the other area where companies are scrimping), our companies are constraining the growth of the economy.


Because the rank-and-file employees of America's corporations are also mainstream American consumers the folks who account for ~70% of the spending in the economy.

Almost every dollar these folks earn in salaries gets spent on food, clothing, houses, education, entertainment, cars, and other goods and services that big American companies produce.

So, if, instead of hoarding their wealth by hiking their profit margins ever higher, companies invested more in employees and equipment, they would help the whole economy.

And the companies would also, of course, help their employees the people who are dedicating their lives to helping the companies earn such vast profits.

Income inequality


It's an "ownership society," all right. Everyone else is getting the shaft.
You might think that voluntarily helping employees by sharing more profits with them would be something corporations would be very eager to do.

After all, again, these employees are dedicating their lives to making the companies so successful.

But, no.

The business-ethos pendulum in this country has now swung so far toward "profit maximization" that most American companies would never dream of voluntarily sharing more wealth with their employees.

These employees, after all, are not viewed as people. They're viewed as "costs" cash outflows that just leech financial value from owners.

In a healthy capitalist ecosystem, companies serve several constituencies, not just owners. Namely, they serve:
Employees, and

In today's version of American capitalism, however, too many companies are mostly serving only one constituency: Owners. "Profit maximization" is the number one and, in many cases, only priority.

A few days ago, I confessed that I hoped American corporations would soon put their record-high profit margins to good use by voluntarily deciding to hire more employees and pay them more.

Alas, you can't challenge prevailing orthodoxy without getting branded a heretic.

I was called a "communist."

I was called a "liberal."

I was called horrors an Obama supporter.

The odd thing about these insults, of course, is that they're all political.

So it's worth noting that politics has nothing to do with this.

This is a private-sector issue, not a government issue. This is about persuading American companies to share more of their wealth with their employees, so the government doesn't have to get involved. As conservatives are fond of observing, the government cannot solve all the problems in this country. The private sector has to do it. So, it's time the private sector started doing it.

American companies are now so obsessed with profit maximization that they are content with millions of their full-time employees being below the poverty line (Walmart, Starbucks, McDonalds, et al).

Think about that for a minute.

Some of the richest, most revered companies in this country companies that are currently generating record-high profits pay their full-time employees so little that they're poor.

Even more depressing is the fact that concepts like "fairness" and "sharing" are now seen as evidence of bleeding-heart socialist tendencies as though the only way to be a bona fide capitalist is to treat your employees like costs and pay them as little as possible.


Even Scrooge would be appalled.
Capitalism doesn't have to be like that. Specifically, it doesn't have to be all about "profit maximization." Companies can be very successful and their owners can do very well with the companies making only a reasonable profit, not the highest-possible one.

These days, American companies have record-high profits, and American company owners are doing just fine.

The American economy and average Americans, meanwhile, are still hurting.

So it's time big American company owners voluntarily shared a bit more of their wealth with the people who help create it for them by paying their employees more. This won't just help the employees. It will help the whole economy.

(And, for what it's worth, I say that not just as a writer but as the owner of an American company. Business Insider doesn't yet have record profit margins or any profit margin, for that matter but we still pay our team as well as we can. And "profit maximization" will never be the primary goal here, at least while I am in charge.)

Read more:

this article states a lot of the same viewpoints but is very well written as well. I agree with it whole heartedly.

in case anyone is too busy (lazy) to read the articles let me briefly summarize.

Corporate America is wealthier than ever before in the history of time. They pay the least (percentage wise) than ever before to their employees. The article states the bottom line is not the best way to manage. Companies have more shareholders than just Wall Street. They have owners, employees, and the economy in whole....which every company is a part of. If companies continue to squeeze the bottom line at the expense of capital investments and employee wages/benefits...they will eventually tank the entire system. Its effects are already being felt. All these workers being paid record low wages spend less (obvious I know). If they had more - they would spend it (obvious I know). If 200mm people were spending more the economy would do better (obvious I know). The bottom line is a terrible method for running a business. It should be a part of the overall management style - not the only style.

Chief Joseph:

Weird how workers are making less yet living better than at any other time in history.

weird how you never understand things - was a time only one parent worked genius.

The mother stayed home and raised the children Christian...unlike now where the state raises them secular (Luciferian is more its doctrines are snuck slyly into the mainstream consciousness)

and ask how many workers return to live with their parents to save on bills....there are higher living standards now but discretionary income is at the lowest its EVER been. that sir, is a fact.

Chief Joseph:

 "..there are higher living standards now but discretionary income is at the lowest its EVER been."

Poor kids can barely afford their iPhones.


So how many Americans own a big Corporation exactly?

my guess....about a dozen multi-billionaires


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