With the Dow Jones industrial average flirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold.
That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high.
With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.
“So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “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.”
Chosen excerpts by Job Market Monitor
Job Market Monitor: Workers share of national income at its lowest level since 1959 while Corporate Profits are at record level
Workers share of national income is at its lowest level 1959 and is plunging.
On the other hand, the share of corporate profits is at a record level.
Source: Job Market Monitor with FRED Graph / St-Louis Fed’