Tuesday, May 14, 2013

Less wages, more profits

The quarterly reports of S&P 500 corporations for the first three months of 2013 show profits rising by more than 5 percent even while revenues have risen by less than 1 percent.


Corporations are getting by with fewer workers than they employed before the crash of 2008, and they’re paying those workers less. Wages and compensation (that is, wages plus benefits) now make up the smallest shares of GDP that they have in 50 years, and their decline has proceeded without interruption since 2001.

According to a report from JP Morgan Chase’s Chief Investment Office, two-thirds of the increase in corporate profits between the end of the dot-com bust and the collapse of 2008 is directly attributable to the decline in the wages they paid their employees. The share of wages from the surplus value to put it in Marxist terms has kept on decreasing to permit maximising profits.

Companies have been replacing workers with machines wherever possible. They have been replacing their own employees with temps—workers hired from employment agencies to whom they pay no benefits and whose wages can be lower than those of regular employees. And those temps are now are working longer hours than regular employees. Historically, an employer’s own workers have worked longer hours than those brought in on a temporary basis from employment agencies. But in 2009, the average workweek of temps began to exceed the average workweek of all employees. The average number of hours that Americans work still hovered at 34.4 in March, the latest month for which we have figures. Temps, however, worked an average of 35.2 hours – more than they did not only during the recession but during the years preceding the recession as well.

American workers have lost much of the capacity to defend their interests, and their employers are exploiting their weakness to extract higher profits they could not otherwise attain.

Adpted from here

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