America’s political challenge, in one little chart
Two data points:
1.) Corporate profits — corporate after-tax profits — reached $1.75 trillion in the third quarter of 2012, an increase of 18.6 percent over a year ago. In fact, corporate after-tax profits now account for a bigger share of the national economy than at any point since World War II ended.
2.) Workers’ wages, on the other hand, now account for just 43.5 percent of our national economy. That is the lowest share of the national economy going into workers’ paychecks that has been recorded since World War II.
In fact, when you combine those two statistics into a single chart, you have created a snapshot of the single most important, consequential long-term issue facing both the U.S. economy and the U.S. political system. It looks like this:
In the chart, the share of the national economy, or GDP, going to workers’ paychecks is in blue. The share of the economy that is going to corporate profits is in red. (Note that in this combined chart, the two statistics have separate scales.)
Again, those are after-tax profits. While corporate chieftains complain that taxes and regulation and unions have made it difficult to do business here — Bernie Marcus of Home Depot is fond of complaining that he and Arthur Blank could never have created that company in today’s business climate — in reality times have never been better in terms of corporate profitability.
There is every indication that this isn’t the end of it, and that both trends will continue over the long term. They are being driven by factors such as technology and globalization, which empower and enrich capital while undercutting the ability of workers to demand anything close to their previous share of the economic pie.
These trends also create the backdrop for the battles being fought in Washington. Should government attempt to compensate in any way for the massive shift in income distribution away from employees, such as by providing health-care and education assistance? Or must government serve only as a disinterested bystander during this historic transfer of economic wealth and power?
The 2012 election was in some ways a referendum on that question, but its verdict was far from definitive. To the contrary, this conflict will continue to provide the subtext of American politics for at least a generation. The fiscal cliff, entitlements, Obamacare, the 47 percent, the 1 percent, corporate taxes, CEO pay, Wall Street, Medicare — the entire spectrum of economic issues confronting our political system is being driven by the forces portrayed in this chart.
– Jay Bookman
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668 comments Add your comment
Fred ™
December 4th, 2012
9:12 pm
Kam: Actually there was one time I didn’t feel like a beer. We got tickets to a Braves game, directly behind home plate, on a Sunday afternoon in August. It was 6 million degree CELSIUS (which is why we were given the tickets lol) and it was actually to HOT to drink a beer………
Fred ™
December 4th, 2012
9:14 pm
Keep: You know what’s coming……….
http://www.youtube.com/watch?v=kY84MRnxVzo
Brosephus™
December 4th, 2012
9:14 pm
Fred
I wish old Tom would tell me if I look like a beer because I feel like one. Well at least I THINK I feel like a beer but I’m not sure it will be confirmed unless Tom tells me I feel like a beer………
Consider it motioned, seconded, and confirmed.
SEC
December 4th, 2012
9:14 pm
Josef
December 4th, 2012
9:07 pm
That is cool! And a great place to live.
Soothsayer
December 4th, 2012
9:14 pm
Backfield in motion!
independent thinker
December 4th, 2012
9:14 pm
Can you even imagine what the chart would look like in a year if the vulture capitalist got elected?
workers wages would probably drop off the chart!
Fred ™
December 4th, 2012
9:14 pm
LOL Bro. Gotta go later folks.
Josef
December 4th, 2012
9:15 pm
Thanks for the chuckles, Guys…
Brosephus™
December 4th, 2012
9:21 pm
Keep
Coming from Brazil, it’s a daily thing. I don’t know what’s in the water down there, but damn….
Soothsayer
December 4th, 2012
9:23 pm
Now, I was going to post something of great social import for your consideration. But, in retrospect, my baser instincts compelled me to post this!
Josef
December 4th, 2012
9:23 pm
Okay
Check out time..it’s been an interesting ride tonight..
Brosephus™
December 4th, 2012
9:27 pm
Keep
Here’s another one from Brazil for you….
http://www.youtube.com/watch?v=oHWbsefjQgc&feature=results_video
Kamchak ~ Thug from the Steppes
December 4th, 2012
9:27 pm
Since we’ve gotten a little bawdy, tonight is the night for the Victoria’s Secret Fashion Show being aired on CBS.
Keep Up the Good Fight!
December 4th, 2012
9:34 pm
Well its no longer a secret if Victoria broadcasts it.
Bro, we know this is what you are truly looking for: http://www.youtube.com/watch?v=Zz95dIVu58E
Tom Middleton
December 4th, 2012
9:36 pm
Is the Messiah in the traditional Jewish sense a Jewish kingdom on earth or is it a never-ending spiritual kingdom anyone, anywhere can claim through love?
If you believe the latter, then you and I are the same in that belief. And if you do, in my opinion, then you’re a de-facto follower of the Christ (and the one God) and maybe can help convert the state of Israel to be saved for all time to come!
Thanks for a great conversation, Josef. Peace to you always, and I mean it every word. Shalom…
P.S. You can have the last say, my friend…
Brosephus™
December 4th, 2012
9:36 pm
Keep
Nah, I’m hoping that Ms. Pole Dancing South America travels to the US via Atlanta.
Time to call it a night. I’ll catch y’all later.
RB from Gwinnett
December 4th, 2012
10:37 pm
How come all the liberal business owners aren’t hiring and paying higher than average wages to do their part?
How many poor kids healthcare could warren buffet pay for if he cared as much about them with his own money?
Jackie
December 4th, 2012
10:59 pm
Profiles in courage was exhibited by the Repubs in the US Senate today.
Former Sen. Bob Dole(R-KS) a decorated WWII veteran went to Senate floor to ask 5 of his former Repub colleagues to vote for the UN Treaty to ratify consistent disability treatment throughout the world.
Our law requires a 2/3 majority of the Senate to vote in the affirmative to ratify any treaty and 38 Repubs voted against the treaty, even though the former Senate leader, himself a disabled vet, watch in dismay at their disgraceful conduct as he sat in his wheelchair on the Senate floor during the actual vote.
If these people will vote against something that will be helpful to our disabled, including those disabled vets that they voted to send to war in Iraq and Afghanistan, what will they do for the against the rest of us.
RB from Gwinnett
December 4th, 2012
11:06 pm
“vote for the UN Treaty….”
That alone is all one needs to question what’s in the treaty. Likely the same as always, UN gets control and we get the bill.
Mick
December 4th, 2012
11:18 pm
**That alone is all one needs to question what’s in the treaty. Likely the same as always, UN gets control and we get the bill.**
That logic is borderline ignorant, how’s about just reading what it says?
Jm
December 4th, 2012
11:19 pm
That chart makes me think:
Buy stocks
Just also buy puts for the next 3 months
RB from Gwinnett
December 4th, 2012
11:31 pm
Mick, “That logic is borderline ignorant, how’s about just reading what it says?”
I would if I gave a crap why the UN says about how we treat our veterans.
I don’t.
Jackie
December 4th, 2012
11:37 pm
I do believe if one reads the treaty, it would not be difficult to discern what benefits it has for the USA.
Wonder if anyone believes Sen. Dole would be for something that would not be in the best interest of the this country?
Jackie
December 4th, 2012
11:38 pm
By the way, using the word “logic” to make your argument is illogical in its entirety.
Jackie
December 4th, 2012
11:40 pm
Comments about what the treaty says about how we treat our vets is another illogical and specious statement. Treatment of all disabled citizens is what the treaty is about. Maybe if one were to read the treaty it would give them insight into what the treaty stands for.
Orange12
December 5th, 2012
12:01 am
http://www.ajc.com/news/business/lockheed-martin-moves-560-jobs-to-texas-in-another/nTMtx/
stands for decibels
December 5th, 2012
5:49 am
“vote for the UN Treaty….”
That alone is all one needs to question what’s in the treaty.
that alone is all those thirty-nine Senators appeared to have allowed themselves to learn about the treaty.
I can think of few punishments gory and painful enough for them.
marko
December 5th, 2012
6:01 am
Historically middle class spending has pulled the country out of recessions. The middle class no longer has the economic muscle to do the job. The last expansion was caused by borrowed spending. Mostly using our homes as ATM’s. The middle class can’t spend money they don’t have, nor can they borrow when their assets are worth less than they owe on them.
Sheldon Adelson obtains most of his wealth from income he receives from his Chinese casino’s. In the the last election he spent the better part of 150 million dollars trying to influence the outcome. I’m happy to say that all he has to show for his efforts is a lousy Romney\Ryan tee-shirt. Americans aren’t asking for hand outs. They’re demanding jobs. The politicians need to understand that their jobs are on the line. They were elected to promote the general welfare. That come directly from that Constitution your fond of whipping out of your pocket Mr. congressman. Perhaps you should try reading it sometime.
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
7:20 am
” Treatment of all disabled citizens is what the treaty is about. Maybe if one were to read the treaty it would give them insight into what the treaty stands for.”
meh.
it comes from the UN.
that tells all those numpties all they need to know.
Stevie Ray..Clowns to the left and Jokers to the right..here I am...
December 5th, 2012
7:25 am
USinUK – not very ladylike (and former Girl Scout)
December 5th, 2012
7:20 am
I’m looking for thoughts on Naders (supported by the likes of Goldmann and related traders) push for transactional tax on stock, dervatives, and related trades. Tax of less that a percent can raise between $178 billion to $358 billion annually.
I can’t find any reasonable counters to this approach. Yet we hear of nothing except opinion columns…why aren’t our elected self-serving dopes considering this?
Stevie Ray..Clowns to the left and Jokers to the right..here I am...
December 5th, 2012
7:27 am
http://www.washingtonpost.com/opinions/ralph-nader-why-a-tax-on-stock-trades-should-be-part-of-a-fiscal-cliff-deal/2012/11/30/d6a1285e-3a38-11e2-8a97-363b0f9a0ab3_story.html?hpid=z2
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
7:28 am
Stevie Ray – because what you would get (in addition to taxes going to the gov) would be outrageous fees charged back to the clients – many of which would be unnecessary trades.
just my humble opinion
stands for decibels
December 5th, 2012
7:33 am
SR @ 7.25, because nobody likes being told what to do, least of all the very wealthy American skimmer class.
Duh.
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
7:38 am
“very wealthy American skimmer class.”
hrm.
I don’t think I’d call them skimmers. skimming implies taking off the top – enough to get by, but not so much that anyone would notice.
they’re ladlers. siphoners. gorgers.
stands for decibels
December 5th, 2012
7:40 am
UnU, I call them skimmers because
1. It is appropriately insulting
2. A lot of what these guys do IS skimming. Microscopic percentages of trillions of dollars winds up being enough to buy legislation, after all.
3. Atrios did it. I think. I’d have to google it to make sure, but I think I heard it there first. And if it’s good enough for my favorite “recovering economist” it’s good enough for me. (Gimme dat old-time religion.)
stands for decibels
December 5th, 2012
7:42 am
it comes from the UN.
that tells all those numpties all they need to know.
I don’t know for a fact that RB from Gwinnett = “all those numpties,” but of course that is precisely the reason that RB from Gwinnett gave @ 11.06 for opposing the treaty.
.
.
(I’ll admit it. I’m having a hard time managing my anger about this. I guess there’s some kind of hard-wiring protection-of-the-species thing going on with me inside. When I see a group of people conspiring to harm those who have been disabled–oftimes as a direct result of stupid foreign policy decisions–I go a little berserk, I guess. And yes, failing to lead internationally means that disabled vets who have places to visit on their bucket list, around the world, will be shut out of facilities because some willfully ignorant elected officials chose to do so. Such people who hurt other people need to atone, and I hope that our heretofore supine Democrats take this rhetorical club and beat the crap out of them in town halls and elsewhere.)
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
7:42 am
“Microscopic percentages of trillions of dollars winds up being enough to buy legislation, after all.”
I get what you’re saying … but when you think about the millions of dollars that CEOs get as a bonus, regardless of how the company performed … well, that’s not skimming.
that’s gorging like a tick.
THAT’S IT!!! The tick class.
Don Abernethy
December 5th, 2012
7:45 am
It is obvious we will never fix the economy with the Democrats in control. As a long time Republican I am more convinced than ever we need a new party with new faces to combat the Democrats , I am more of a Tea Party type and I would hope somehow that a new party could evolve from it.
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
7:46 am
“It is obvious we will never fix the economy with the Democrats in control.”
you mean the way we have positive job and economic growth for the last 2+ years??? that kind of “never fix”???
numpty.
Corbin Sharpe. Baby Boomer leech...and earned it!
December 5th, 2012
7:49 am
USinUK,
Good morning!
“I don’t think I’d call them skimmers. skimming implies taking off the top – enough to get by, but not so much that anyone would notice.
they’re ladlers. siphoners. gorgers.”
They remind me of a trick I used to play on my kid sister. When we had to share a milkshake, I would take the straw and say, “My half is on the bottom and I’ll go first”. Dad, our personal UN, always stopped me though…
stands for decibels
December 5th, 2012
7:50 am
Perhaps we could get the Koch Brothers to fund a focus group study to determine which name is more insulting.
Corbin Sharpe. Baby Boomer leech...and earned it!
December 5th, 2012
7:51 am
The Tea Party is so anti American. You can tell because only European Socialists drink tea…
stands for decibels
December 5th, 2012
7:51 am
…all in the name of protecting the Real American He-Man Woman/UN-Haterz Club, of course!
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
7:51 am
“They remind me of a trick I used to play on my kid sister. When we had to share a milkshake, I would take the straw and say, “My half is on the bottom and I’ll go first”. Dad, our personal UN, always stopped me though…”
hahaha … that would make them bottom feeders!
Granny Godzilla - Union Thugette
December 5th, 2012
7:52 am
CHIP ROGERS?
What the hell is that about?
And GPB…..expect a scathing letter from me!
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
7:54 am
and now … LUNCH!
stands for decibels
December 5th, 2012
8:00 am
And GPB…..expect a scathing letter from me!
Yeah, ditto, unless it turns out Chip’s actually going to be used as bait for a new nature series (in which they’ll get another C-note from me.)
Gale
December 5th, 2012
8:01 am
My initial reaction to the Chip Rogers announcement was that this election told him there is no future for nut cases in politics.
JamVet
December 5th, 2012
8:01 am
As a long time Republican I am more convinced than ever we need a new party with new faces…
Amen, to that one!
Because this current version of the GOP is the worst that I have ever seen (which is truly saying something) and frankly, stinks on ice.
And even though your gang has irrefutably proven that they are VERY, VERY slow to learn, let’s see what three or more crushing defeats at the polls do, shall we?
Finn de Siècle (The System isn't Broken; It's Fixed)
December 5th, 2012
8:03 am
Ailes’s orders mean new rules. Ailes’s deputy, Fox News programming chief Bill Shine, has sent out orders mandating that producers must get permission before booking Rove or Morris.
mwuahahahahahahahaha……..put the idiots over there in the carnival cages, pahleasssse.
Granny Godzilla - Union Thugette
December 5th, 2012
8:04 am
SKIMMERS!
Brilliant.
JamVet
December 5th, 2012
8:06 am
ask@gpb.org
Email them if you have something to say about this bizarre decision.
I just did…
stands for decibels
December 5th, 2012
8:12 am
GG @ 8.04, let us acknowledge credit where it is due.
stands for decibels
December 5th, 2012
8:14 am
from one of the first entries you will see on that googling:
I don’t think it’s hyperbole to describe the LIBOR manipulation as theft at an almost unimaginable scale. One issue with too big banks, a too big banking system, and generally asleep regulators, is that the amount of money to be made by shifting any key rates by even a tiny unnoticeable amount is huge. A teensy percentage of a trillion dollars is still big money.
Free money for the Great Casino, government backstopping of losses, and legal means to take a chunk of every transaction aren’t enough for them. They want to steal some more.
But they’re extraordinary people, so what’s to be done?
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
8:15 am
“But they’re extraordinary people, so what’s to be done? ”
off with their heads.
USinUK - not very ladylike (and former Girl Scout)
December 5th, 2012
8:18 am
OT … but, holy moses this looks yummy
http://www.telegraph.co.uk/foodanddrink/recipes/9706907/Italian-Christmas-chocolate-cake-recipe.html
Oscar
December 5th, 2012
8:21 am
I see Reid is proposing changes in the Senate rules. Sounds like a good idea. There should be debate on the floor of the senate but bills should eventually come down to a vote with a majority of 51 passing or defeating the bill.
stands for decibels
December 5th, 2012
8:22 am
FOAD, Chip SHEETZ.
Gale
December 5th, 2012
8:23 am
Spices and nuts, yum. Chocolate, a bit too much for me. I’m just not a chocolate fan.
Mick
December 5th, 2012
8:23 am
rb
No borderline about it, when it comes to the UN treaty vote about people with disabilities – you are IGNORANT…
Alter Ego
December 5th, 2012
9:39 am
So the world’s most complex economy, and related socio-economic ills, can be distilled into a two series graph? Interesting inferences in this chart, sparse as it is, although perhaps it contradicts the desired message of business=bad, government=good..
The Wage/% GDP trend slides downward until the tech boom of the 90’s and then rebounds. Union membership peaked in 1979, and has declined steadily since. The economy has evolved from a Manufacturing centric one, but the skills aren’t evolving. This has to change. We can’t exist on a service economy and provide the wages people expect by unionizing Wal-Mart and McDonalds.
The profit numbers are interesting. 2012 indicates a peak for profits, starting around 2008. It’s no surprise-money is sitting on the sidelines as business tries to grapple with this administration and its hostile business stance, crushing and unpredictable regulations and lack of defined policy. Sadly, this is only going to get worse, before it gets better-if it ever does.
Peterabun
December 5th, 2012
3:59 pm
If you believe everything Bernie Marcus said, you’d be a fool!! he’s as right-wing as they come. George H.W. Bush wasn’t conservative enough for Bernie, so he supported Ross Perot, which proves Bernie isn’t the smartest guy on the block…Ross Perot’s votes helped elect Bill Clinton!
This chart is really disturbing.
Peterabun
December 5th, 2012
4:09 pm
Alter Ego,
I think you need to study finance, at least a little. Your Fox News analyisis is just plain wrong…this chart has nothing to do with corporations holding onto their money…it shows net after tax profits, not assets.
Also, as union membership has fallen, so have wages as a percent of GDP. Perhaps if union membership was rising, so would wages. I agree we need to be doing a better job of training our workforce, but that’s hard to do when the skilled jpbs are being sent overseas as they have been since the 80s.
Gap between corporate profits and wages grows to post-war record — MSNBC
December 5th, 2012
6:08 pm
[...] bad news: workers are not benefiting from record profits. In fact, wages have now fallen to a record low of 43.5% of [...]
Gap between corporate profits and wages grows to post-war record | Now
December 5th, 2012
6:15 pm
[...] bad news: workers are not benefiting from record profits. In fact, wages have now fallen to a record low of 43.5% of GDP. Look at the chart. There seems to be some kind of income fairness in this country [...]
Vast Right Wing Conspiracy (aka "Knuckle-Dragger")
December 5th, 2012
9:42 pm
Poor old Jay – can not get his mind around a complex set of circumstances, but is always willing to endeavor to distort them to prove a Democrat point.
When the government creates great uncertainty for business, as emperor nero has done, “cash” is king. Firms want to squirrel it away to help deal with whatever the uncertainty turns out to be. They do this through numerous means, which includes laying off employees. So profits are up due to numerous reasons, the vast majority of which have nothing to do with corporate greed, just good corporate management. It is what their shareholders pay them to do. Jay, you should be ecstatic about increased corporate tax collections.
Decreases in wages have many causes, also. Included among these are regimes that desire greater unemployment, thus leading to less wages on an absolute basis; a dumbed-down populace which is easier for the regime to control, but also commands a lesser average hourly wage; and crazy unions (example – Hostess) which destroy employment through their insane demands (check how Hostess products were delivered before the firm shut down); and a much more competitive international market for labor (not sure how you are going to control the communist Chinese, although you Democrats are fellow travelers).
To sum up, Jay, your point is absurd (as usual). Do y’all count food stamps as income? Might make you feel better about the situation.
Daedalus
December 6th, 2012
11:54 am
I think Thulsa is the one with the reading comprehension problem:
Jay said: “Bernie Marcus of Home Depot is fond of complaining that he and Arthur Blank could never have created that company in today’s business climate — in reality times have never been better in terms of corporate profitability”
and Thulsa said: “Looks like your reading comprehension failed you. Bernie Marcus never said HD is not profitable. What he said is that if he and Arthur had to start hd all over again from the beginning that they wouldn’t be able to do so due to onerous regulation. Pay attention sir.”
Um, Thulsa. We’re you homeschooled?
Economic trends bode poorly for the working man | Jay Bookman
December 7th, 2012
7:14 am
[...] article focuses on themes that I’ve tried to address here as well, such as the blog post earlier this week detailing how employees are being forced to split an ever-smaller share of the economic pie, while [...]