An Uneven Recovery: New Government Data Show Corporate Profits Enjoying Unusually Large Gains, While Workers' Incomes Lag Behind

Publication Date: September 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Isaac Shapiro; David Kamin

Research Area: Labor

Keywords: Economic projections; Corporate finance; Income diversity; Economic inequality

Type: Report

Abstract:

Commerce Department data on national income trends released on August 27 point toward troubling developments in the current economic recovery.  Of greatest concern, wage and salary growth for workers has been exceptionally poor while corporate profits have enjoyed unusually large gains.

This conclusion emerges from an examination of the Commerce data.  First, we looked at the composition of the income gains that have occurred during the recovery.  We focused on how much has gone directly into workers’ pockets as increased wages and salaries; how much has been received by corporations as profits; and how much has been absorbed by rising employer contributions for workers’ health insurance premiums and pensions.  The data show that the share of real income growth that has gone to wages and salaries (that is, the total increase in wage and salary income) has been smaller than during any other post-World War II recovery period, while the share of real income growth that has gone to corporate profits has been larger than during all other post-World War II recoveries.