Economy

Workers Get Lowest Share Of Corporate Income Since 1950

CREDIT: Shutterstock

In 2013, the share of corporate income that trickles down to workers hit its lowest point since 1950, according to an analysis from the Economic Policy Institute.

Corporate income, which makes up about three-quarters of all private sector income in the country, can either go to employees or the owners of companies, and last year just under 73 percent went to employees, the lowest point in more than six decades.

snapshotlaborincome-09-03-2014

CREDIT: Economic Policy Institute

Workers’ share of corporate income was trending downward for at least a decade before the recession hit, and it only rebounded in 2008 because corporate profits were hit by the financial crisis, falling faster than wages for several months.

Workers aren’t earning less because they’re slacking off — just the opposite. Their productivity increased 8 percent between 2007 and 2012 while their wages actually fell, a trend that has been going on since at least 1979. And they’ve been speeding up since the recession, increasing their productivity last summer at the fastest pace since 2009.

The productivity has helped out corporations. They saw record high profits last year, rising to $1.68 trillion, and they have been rising steadily for some time, more than fully recovering what they lost to the financial crisis. Yet workers are getting little of that money. Profits have risen nearly 20 times faster than workers’ incomes since 2008, and on the whole workers have seen a lost decade of stagnant wage growth.

And those low labor costs are part of why the Congressional Budget Office predicts strong corporate profit growth in years to come even as it expects the economy to underperfom.

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