Posts Tagged ‘corporations’

hourly wages-1979-2013

According to the Economic Policy Institute [pdf],

For all but the highest earners, hourly wages have either stagnated or declined since 1979 (with the exception of a period of strong across-the-board wage growth in the late 1990s). Median hourly wages rose just 6.1 percent (or 0.2 percent annually) between 1979 and 2013, compared with a decline of 5.3 percent (or -0.2 percent annually) for the 10th percentile worker (i.e., the worker who earns more than only 10 percent of workers). Over the same period, the 95th percentile worker saw growth of 40.6 percent, for an annual gain of 1.0 percent.

During that same period, productivity in the U.S. economy grew 64.9 percent.

annual wages-1979-2012

Only the “wages” of the top 1 percent (when measured in terms of real annual wages) surpassed the growth of productivity. The cumulative change in the wages of all other groups was less.

In other words, most of the growing amount of value produced by American workers wasn’t paid back to them in the form of wages but, instead, was either retained by their employers or distributed to a tiny group of CEOs and managers at the top.


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Of course, there’s a bidding war for Family Dollar Stores, one of the country’s biggest deep-discount retailers!

According to Richard W. Dreiling, Dollar General’s chairman and chief executive,

“It’s fair to say that the economy is creating more of our core customers,” he said. “The middle-income customer is getting squeezed.”

Dreiling’s view is confirmed by the latest report on household income trends from Sentier Research [pdf]. Their Household Income Index shows the value of real median annual household income in any given month as a percent of the base value at the beginning of the last decade (January 2000 = 100.0 percent). As readers can see in the chart above (red line), the index for June 2014 stood at 94.1 compared to 98.8 in December 2007, when the “great recession” began, and 97.0 in June 2009, when the “economic recovery” supposedly began. The index had increased unevely from August 2011 (the low point) to this summer.

What does it mean? In short, it means that average American households have been beaten down—and therefore have been forced to pinch pennies by purchasing at discount retail stores like Family Dollar, Dollar Tree, and Dollar General—and that their incomes, while far below their peak, have in fact been rising over the last few years—which means they are able to spend more of their pennies at those same discount retailers.

Clearly, as I’ve argued before, “there’s a lot of profit to be made in selling discount commodities to the low-income and falling-income American families whose numbers have grown over the course of the past three decades, and especially in the midst of the Second Great Depression.”


To listen to the leaders of American corporations, their lobbyists, and their friends in economics, U.S. corporations are losing out in the competitive battle with foreign corporations because they face tax rates that are much too high. Therefore, they are “forced” to engage in tax inversions unless and until corporate tax rates in the United States are lowered.

I’ve explained before (e.g., (here, herehere, and here) how actual corporate taxes are, in fact, much lower than the mjuch-ballyhooed statutory rate. But you don’t have listen to me. Let Edward D. Kleinbard, a professor at the Gould School of Law at the University of Southern California and a former chief of staff to the Congressional Joint Committee on Taxation, explain how the United States tax code is not impeding global competitiveness. In fact, he argues, the opposite is true.

The recent surge in interest in inversion transactions is explained primarily by U.S. based multinational firms’ increasingly desperate efforts to find a use for their stockpiles of offshore cash (now totaling around $1 trillion), and by a desire to “strip” income from the U.S. domestic tax base through intragroup interest payments to a new parent company located in a lower-taxed foreign jurisdiction. These motives play out against a backdrop of corporate existential despair over the political prospects for tax reform, or for a second “repatriation tax holiday” of the sort offered by Congress in 2004.

The problem in the United States is not an anti-competitive tax structure. It’s that more and more of the surplus captured by American corporations, which could be taxed to pay for government expenditures, is beyond the reach of federal authorities. The result has been to shift more and more of the federal tax burden onto individuals—onto rich individuals, who like American corporations find all kinds of ways to shelter their income, and onto poor ones, who simply can’t pay any more than they currently are.

Something’s got to give—and American corporations, their lobbyists, and their friends in economics are working hard to make sure corporate profits remain in the hands of a few.