Corporations Richer under Obama,but Employee Wages Decrease

The rift between industry profits and wages has never been this great. And the more the companies earn, the less they invest. Indeed, they cut jobs and earn in exchange. Americans are having to deal more and more with cuts to health, public infrastructure and welfare for handicapped students.

They attack Obama from every side, accusing him of waging war against corporations. They fear fiscal reform. Higher taxes and a “flood of new rules” will damage an already subpar economy, shouted Tom Donohue, president of the U.S. Chamber of Commerce, a few weeks ago against Barack Obama. “We’re going backwards,” he added bitterly. But the numbers tell a different story: Under Obama the multinationals are seeing an unprecedented prosperity. Americans, however, are having a worse time of it. The more the profits of the corporations rise, the more the wages of their employees dwindle. The rift between industry profits and wages has never been this great.

Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, explained Dean Maki, chief U.S. economist at Barclays, to the New York Times, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation. Moreover, the more the companies earn, the less they invest and the fewer people they hire. Indeed, they cut jobs and earn in exchange. Since 2008, the year in which Obama arrived at the White House, according to the figures of GDP reported by Bloomberg.com, the profits of the multinationals have grown by 171 percent, more than ever before under any of Obama’s predecessors since World War II: double that under Ronald Reagan and 50 percent more than the total reached with the internet boom in the ’90s. A triumphant growth which reached its own apex last year: 2012 was a record, with 1.75 trillion dollars pocketed just between September and December (+18.6 percent with respect to 2011), the best result since 1950. Little by little, however, as the companies are getting richer, Americans are getting poorer and poorer.

In 2012, CNN Money calculated that wages had reached their lowest in history. In 2012 salaries represented 43.5 percent of the GDP, when in 2011 they constituted 49 percent. “There hasn’t been a period in the last 50 years where these trends have been so pronounced,” shouted Maki. The key word is always the same: crisis. “So far in this recovery,” explained Ethan Harris, one of the representatives of the Global Economics board of Bank of America, to the New York Times, “corporations have captured an unusually high share of the income gains. The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.” But in this income boom, investments do not correspond with employment growth. The official data will be released on Friday: analysts expect a stable unemployment rate at 7.9 percent. This is because the companies have not hesitated to fire people. One case of many is that of United Technologies. The conglomerate, one of the 30 companies of the Dow Jones, saw its own profits grow from 42.7 billion in 2005 to 57.7 in 2012. Its labor force has remained the same (218,300 employees), but the company has already announced wanting to cut another 3,000 employees, after the 4,000 fired in 2012. The attempt to maintain elevated profit margins knows no bounds.

United Technologies launched the last wave of firings last month, four days after its listing reached the record of $90 on the Exchange. The demands made by the Federal Reserve to keep interest rates low, stimulate the economy and encourage investors made sure that Wall Street repaid the multinationals, thanks also to the growth of the Asian markets and in a more stable Europe. In the past few days, the Dow Jones, index of 30 principal listings, flew to 14,207.94 points, a record number since the maximum point of 14,164.53 reached before the great crisis, on Oct. 9, 2007. A ‘Made in Fed’ rally with the complicity of the corporate profits, exceeding expectations. Since March 2009, when it reached the historic low of 6,547.05 points, the Dow Jones has more than doubled, gaining over 7,500 points. But while the industries are getting richer, Americans are seeing their conditions worsen. Besides stagnant wages, they will have to face $85 billion cuts expected by the sequester, because the first things to be cut will be welfare programs for the weaker zones. According to the plan presented by the Speaker of the House of Representatives John Boehner to the Office of Management and Budget, health (200 million cut just from Obamacare), public infrastructure and funds allocated for natural disasters and education will get the ax: 633 million will be cut from welfare for disabled students alone.