Economy, Healthcare, Income Disparity, News, Op-Eds

Income Disparity: Corporations Make Record Profit, Wages At All-Time Low (VIDEO)

The New York Times has published the revised government calculations of corporate profits and wage and salary income compared as a percentage of the GDP, and the results are much worse than we earlier expected. The chart showed that corporate profits accounted for 9.7 percent of GDP, the highest level in US history. It indicates that big businesses have posted record profits during the end of the recession, and the recovery as well. So the question now, where is that money? And where are the jobs? Well, obviously, the money has notĀ “trickled down” to average Americans. Instead, it’s stacked up in the bank accounts of the richest Americans, as the top 1 percent accounted for more than all, 121 percent of all income gains during the first two years of the economic recovery. How is that possible? Well, they are actually 11.2 richer, while the lower 99 percent of Americans got 0.4 percent poorer.


The dark-shaded areas in the chart represents a recessionary period, and as we can see in the Great Recession (2007-2010) the corporate profits portion of GDP plunged first, and then rebounded quickly in the mid of the recession, early 2009, shortly after the collapse of Lehman Brothers (which has deepened the concerns about the overall health of the financial system).

Most readers’ first reaction to the chart would be, “well that’s great, more prosperous businesses will lead to more prosperous job market, supported by strong wage growth and spending activity.” Unfortunately, this theory is WRONG. While corporate profits are at record highs, the workers’ wage share of GDP is at a record low. It was estimated first to be at 44 percent, which would still be the lowest since the Great Depression, and then revised to even a lower rate, 42.6 percent — the lowest EVER.


This chart illustrates the wages’ percent of GDP. As you can see here, during the Great Recession, the wages’ percent was growing growing in the early recessionary period. However, at the point when corporate profits rebounded and began to climb to historically high levels, the wages plummeted back down.

And to expose GOP lies when claiming Obama’s taxes are destroying the economy, the numbers showed that corporate taxes are at the lowest levels since the 1960s. Not only that, but even personal taxes are at lower levels than the 1980s, when Reagan was president.


No wonder why the top economists on CNBC or Fox Business can’t give a clear answer for the disconnect within the economic data. We have a stock market at record highs, a job market that creates an average of 150K additional payrolls each month, yet abysmal GDP growth and relatively high unemployment levels (7.4 percent in July), at least when we compare it to corporate earnings and stock market performance during this recovery. We have hundreds of indices to measure our economic performance, but nothing to measure the greed or rapacity of America’s most profiting corporations.

Employers are utilizing and taking advantage of the fear and worry within their employees. After the massive layoffs and job losses during the economic downturn in 2008-2009, American workers became threatened from less job security, which has led them to reduce their vacation and leave times. Others became underemployed after a long term unemployment, working for no benefits, and for less what they were expecting. These factors have led the corporations to increase the number of part-time workers, to avoid paying for healthcare and other benefits. They utilized the mentality of “any jobs is better than no job at all” to serve their interests and make the maximum profits by investing in the fear and the depression of the workforce. That’s why most jobs created during the recovery were part-time, low-wage jobs.

Its important to mention that despite the recent spikes in stock values, major corporations like Wal-Mart and McDonald’s are fighting against the Affordable Care Act that requires large businesses to purchase a health insurance plan for their employees. They are also fighting against every proposal to increase the minimum wage. Wal-Mart, in fact, hasĀ threatened to close DC stores if the minimum wage proposal signed into a law in DC area.

Here is a shocking video that illustrates the reality about income inequality in the US versus what most of us think:

About Hadeer Abdulkareem

I am a 21 years old student majoring in Economic studies, live in Dallas area. I believe that we can always adopt new approaches and see how would they work. We don't have to stick with same values, same traditions, same mind-set if we see they are not as efficient as we might think.


One thought on “Income Disparity: Corporations Make Record Profit, Wages At All-Time Low (VIDEO)

  1. You need to know how the lawyer will handle your case.
    There are many ways to choose a freelance graphic design artist.
    Non-profit corporations are required to observe all of the same corporate formalities as their for-profit counterparts,
    including holding regular meetings of the board of directors and recording the minutes of these meetings.

    Posted by Herbert | November 29, 2013, 7:36 pm

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