With the caveat that I’m crunching numbers that other people who work regularly with these stats know more about than I do, my observation is that based on Dept. of Commerce data (NIPA table 1.14), corporate profits remain well above the long-term average, and employee comp is well below.
Specifically, in 2011, compared to the total gross value
added by corporate businesses, total compensation to employees was 58.7%. This was well below the long-term average (1929 – 2011) of
64.2%.
The flip side of this is that corporate profits, as a
percentage of gross value added, were 9.6% in 2011. This was well above the
long-term (1929-2011) average of 7.1%. (The profits are after interest
payments and taxes, and include adjustments this series makes for inventory
valuation and consumption of capital, i.e. depreciation.)
The cause of this higher profitability and lower comp to
workers? Up for debate. Things I suspect are reduced bargaining power of
workers (weaker unions, greater global competition); deficit governmental spending (spending must go down from here, or taxes up, or both); low interest rates; and less competition by businesses (weaker antitrust enforcement). These aren’t
mutually exclusive. The last factor, less competition and weaker antitrust
enforcement, might be hard to quantify. Also, are there governmental benefits that act as compensation to workers, but
are not captured by these stats? I don’t know, but that’s a question it would be nice to have insight into.
Increasing financialization of the economy might also be a factor. You could think of that as a somewhat unproductive finance sector siphoning off profit, and I think that is true to a degree, or, less polemically and more accurately I think, the fact that more and more work is done by machines and the owners of those machines get paid something for their capital. However, labor's share dropped sharply over the past decade, and that is in part what makes me suspect that it may well head back up. Even in 2003, for example, the percentage was 64.5%, which was entirely in line with the multi-decade average, and well above the current 58.7% figure.
Increasing financialization of the economy might also be a factor. You could think of that as a somewhat unproductive finance sector siphoning off profit, and I think that is true to a degree, or, less polemically and more accurately I think, the fact that more and more work is done by machines and the owners of those machines get paid something for their capital. However, labor's share dropped sharply over the past decade, and that is in part what makes me suspect that it may well head back up. Even in 2003, for example, the percentage was 64.5%, which was entirely in line with the multi-decade average, and well above the current 58.7% figure.
