Page 1 of 3

Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 3:48 pm
by The Dharma Bum
Why are US corporate profits so high? Because wages are so low
By Jamie McGeever JANUARY 24, 2014

U.S. businesses have never had it so good.

Corporate cash piles have never been bigger, either in dollar terms or as a share of the economy.

The labor market, meanwhile, is still millions of jobs short of where it was before the global financial crisis first erupted over six years ago.

Coincidence?

Not in the slightest, according to Jan Hatzius, chief U.S. economist at Goldman Sachs:

“The strength (in profits) is directly related to the weakness in hourly wages, which are still growing at just a 2% nominal pace. The weakness of wages and the resulting strength of profits are telling signs that the US labor market is still far from full employment.

Companies have not been unable to raise prices much because of the economic recovery has been fragile. But they’ve still managed to boost profits beyond anything ever seen before because they’ve got away with employing as few workers as possible at as low a rate as possible.

Compare and contrast these two charts:
Image
Image

So, corporate profits are their highest ever and wage growth is near its lowest in half a century. But don’t expect the transfer of that cash from businesses to workers to start any time soon, says Hatzius:

“The bottom line is that the favorable environment for corporate profits should persist for some time yet, and the case for an acceleration in the near term is strong. Hourly labor costs would need to grow more than 4% to eat into margins on a systematic basis. Such a strong acceleration still seems to be at least a couple of years off.”

http://blogs.reuters.com/macroscope/201 ... re-so-low/

When even GS thinks wages are too low there really is a major issue.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 3:57 pm
by eynon81
crap job market.

over-abundance of labor.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 4:01 pm
by Bauce
eynon81 wrote:crap job market.

over-abundance of labor.

Yeah and efficiency is at an all time high so even as demand returns jobs don't.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 4:08 pm
by eynon81
Bauce wrote:
eynon81 wrote:crap job market.

over-abundance of labor.

Yeah and efficiency is at an all time high so even as demand returns jobs don't.


people willing to put up with more crap since the job market is bleh.

all very late 19th century.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 4:20 pm
by Menson
People are glad just to have a job. I am noticing serious shifts back to locally based food and luxury good production. I think the path to employment for a lot of people, in the future, is going to have to be developing a marketable skill (carpentry, sewing, soapmaking, husbandry, etc) and producing/selling things in local markets just like in the old days. Multinationals are realizing that they can do more with less. People are going to have to carve out their own living based on the skills that they have to offer. It isn't a prestigious way to live, but the point isn't to be flashy, it is to survive.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 4:23 pm
by eynon81
Menson wrote:People are glad just to have a job. I am noticing serious shifts back to locally based food and luxury good production. I think the path to employment for a lot of people, in the future, is going to have to be developing a marketable skill (carpentry, sewing, soapmaking, husbandry, etc) and producing/selling things in local markets just like in the old days. Multinationals are realizing that they can do more with less. People are going to have to carve out their own living based on the skills that they have to offer. It isn't a prestigious way to live, but the point isn't to be flashy, it is to survive.


http://www.foreignpolicy.com/articles/2 ... o_yeomanry

over-educated/skilled + underemployed lead to a whole mess of Chinese Civil Wars back in the day.
Image
what an underemployed person may look like.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 4:35 pm
by Bauce
Menson wrote:People are glad just to have a job. I am noticing serious shifts back to locally based food and luxury good production. I think the path to employment for a lot of people, in the future, is going to have to be developing a marketable skill (carpentry, sewing, soapmaking, husbandry, etc) and producing/selling things in local markets just like in the old days. Multinationals are realizing that they can do more with less. People are going to have to carve out their own living based on the skills that they have to offer. It isn't a prestigious way to live, but the point isn't to be flashy, it is to survive.

I bet you love this. Hipster.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 4:51 pm
by The Dharma Bum
People may be glad to have a job and accept this but what about from the other end of the spectrum? Why should I have to wait in a long line because there is only one cashier on the job at HEB? Or why should I go to a store when there is no one to help me because they always have a skeleton crew on staff as a normal course of business?

What about that aspect of demand? Perhaps these record profits should be taxed at a higher rate and the proceeds used to fully staff all state employment posts.

No more waiting for 2 hours at the DMV or other government office and full employment at a living wage.

Re: Goldman Sach says record profithttp:// because wages too

PostPosted: Mon Jan 27, 2014 5:47 pm
by Bauce
A lot of people are sick of waiting in line so they do their shopping and DMVing online. Poof. Even less jobs.

Re: Goldman Sach says record profit because wages too low

PostPosted: Mon Jan 27, 2014 5:58 pm
by gla22
There should just be more vacation time, 3 day weekends every other week. Most people in the 9-5 grind would like more than 3 weeks a year vacation and with the excess labor supply, why not? 6 weeks vacation time should be the new normal.