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The two-headed demon trend of increasing corporate profits and declining wages has shown little sign of abatement, according to the latest numbers:

The year-over-year change in the so-called core consumer price index, which excludes volatile food and fuel, has outpaced hourly earnings for the last four months. In January, average hourly earnings climbed 1.5 percent from a year earlier, while core inflation was up 2.3 percent.

"A lot of the outperformance of profits has been due to the fact that margins are expanding," said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. "Firms have been able to keep prices intact even though labor costs have been declining."

That's one hell of an "even though," Mr. Chase & Co.  The news that 88% of growth between mid-2009 and the end of 2010 went to corporations while 1% went to workers was nauseating last July and remains a quease-inducer today.  Even Feroli admits the tragedy here, though his chief concern appears to be consumer spending, not Middle Class security:
...the decline in inflation-adjusted wages bodes ill for the sustainability of economic growth as consumers may eventually be forced to cut back, Feroli said. Businesses have also been slow to redeploy their profits into new hiring.

"So far what you've had is the government has been able to step in and prop up household purchasing power by various cuts in payroll taxes, various increases in social benefits," said Feroli. "That has sort of kept the whole thing going, but you might worry with real wages being hit spending is going to decline."

The Bloomberg report concludes by noting that 70% of companies have posted "better-than-expected" profits since January 9th.

Originally posted to WePartyPatriots on Wed Feb 22, 2012 at 10:04 AM PST.

Also republished by Jobs Wages and Community Investment Working Group, Income Inequality Kos, and The Democratic Wing of the Democratic Party.

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Comment Preferences

  •  This mirrors my own experience. (7+ / 0-)

    I work on a loading dock for a retail establishment. They're "hitting their numbers" quite nicely, and then some.  But the truth is that wages are falling here. The work load is not changing, but the full timers were phased out long ago, and the part timers are working a shift or two a week. The employer likes keeping us all in limbo as to schedule (i.e. "open availability". The worst thing in employment since Satan), and the people who made $10 hr. have been let go. Most everyone here makes minimum now.

    I write the series Confessions of a Retail Worker here on DK. It documents my life in a non-unionized workplace.

    by Lightbulb on Wed Feb 22, 2012 at 10:20:32 AM PST

    •  Your exactly right Lightbulb. (1+ / 0-)
      Recommended by:
      Lightbulb

      Many people here really don't get it. There has been a structural change in the labor market. It was accomplished by design, and until we address the fact that it is failing to provide the so-called shared prosperity that our politicians blather on about nothing will change.

      Labor is taking a smaller slice of the pie each year, this has been covered in detail on many economic blogs. Neoliberalism, Market  Fundamentalism, whatever you want to call it, is a system that empowers the wealthy at the expense of just about everything else.

  •  it is up to the government... (6+ / 0-)

    to even things up. If companies want to pay less then we are going to have to make it up elsewhere. Tax capital gains at a 30% rate and use the money to provide for people who have not seen a raise in decades. Just give the money away. Regulate rent. that's right it's time for rent control. If wages aren't going up then the rent ain't going up.

    It is time for some radical shit, because the status quo ain't working

    The nicest and most intelligent people are the ones that share my point of view.

    by jbou on Wed Feb 22, 2012 at 10:26:02 AM PST

    •  Don't hold your breath (2+ / 0-)
      Recommended by:
      jbou, theunreasonableHUman

      If the worst economic crisis since the Great Depression didn't motivate the Democratic Party to do something about jobs AND living wages, what do you think they will do when the pressure's off?

      To those who feel the need to reply to my comment: Please don't try to sell that bullshit stimulus plan to me as anything to do with jobs. Most of that money got sucked up by the banks and Wall St. It never created jobs. But it did make the handful who own the planet richer. And the banks made money on all corners of the deal.  

      What's the difference between the Democrats and Republicans? Republicans want to turn us into slaves. Democrats want us to feel good about the experience.

  •  TnR We saw these numbers coming (1+ / 0-)
    Recommended by:
    FarWestGirl

    GINI was stable for nearly 2 years, in 2011 GINI showed increased wealth/income disparity, while the Census report showed median houshold income drop a grand.

    TnR

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Wed Feb 22, 2012 at 12:53:33 PM PST

  •  Wages always lag the recovery. No news here. (0+ / 0-)
    •  No (1+ / 0-)
      Recommended by:
      theunreasonableHUman

      THere's a fundamental difference between a sprained ankle and a broken ankle.

      This economy is a fine example of a broken ankle. The structure of the economy at the base  - where wages equal living costs - has been destroyed.

      Too many living wage job markets have been downsized, outsourced, turned into low-wage, temporary work, subjected to 'economies of scale', the 'discipline of capital', privatized' and wiped out by automation, including forms of work that should never be automated.  

      The failure of this administration to come to grips with this 30 year long process, means it continually applies the medicine for a sprained ankle - when it is, in fact, broken - and then wonder why the patient isn't bouncing back.  

      Indeed, many of their economic ideas are only making things worse for the victims of this fraud-ridden crisis.  

      Wages aren't lagging behind the economy. Whatever 'growth' is being created, is being carved out of living wages, jobs and our future to benefit the people who can buy politicians. In short both parties are robbing us of our future, while they tell different kinds of lies to their respective constituencies.  Meanwhile they both work for the same precious few.

      And that's a 'bipartisan' critique.

  •  So much for trickle down theory (0+ / 0-)

    Shop Liberally this holiday season at Kos Katalog

    by JamieG from Md on Wed Feb 22, 2012 at 06:47:57 PM PST

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