Profits Up, Labor Down

Is a weak labor market good for U.S. corporate profits?

September 2, 2013

1. The largest corporations in the United States have experienced record profits in recent years, despite a slow economy.

2. Booming corporate profits are less a reflection of a strong U.S. economy than an extremely weak job market.

3. In a weak job market, workers have little bargaining power.

4. This allows companies to keep labor costs down and pass on more profits to shareholders.

From The Stock Market’s Rational Exuberance by Bloomberg View (Bloomberg Businessweek)

A weak job market keeps workers from bargaining for higher pay, saving firms money even as the economy struggles.

A weak job market keeps workers from bargaining for higher pay, saving firms money even as the economy struggles.

September 1, 2013