With fast food and Walmart workers striking for living wages and decent benefits, the corporations they enrich have never fared better. Catherine Rampbell analyzes the 3rd quarter GDP report for 2012.
That's all well and good, except that those gains haven't been widely shared. What makes these figures perverse is the corresponding plummet in median wages. Interestingly, Rampbell notes that the profits weren't derived from weakened global demand, but from bolstered earnings at home.
That means it doesn't have to be this way. Catherine Ruetschlin's report, Retail's Hidden Potential, suggests that it is in everyone's, including low-wage employers', best interests to raise wages. The fact that corporate profits have been gleaned from industries that can't be outsourced indicates that demand wouldn't suffer from higher tax rates. There's nowhere for these service and retail jobs to go.
The divergence between corporate profits and wages recalls Jared Bernstein's memorable inequality dragon:
This trend is a result of misguided and ideological policy decisions. Enthralled by a philosophy of maximizing shareholder value above all else, the modern corporation suppresses labor costs, while generously paying back record profits to investors through stock repurchases.
But there is a steep price, both to their workers and, by proxy, the American economy writ large. Similarly, beltway negotiators demand cuts to corporate tax rates even as taxes paid have reached their lowest point ever. Enterprising scholars call for reducing income taxes on the rich back down to "prosperous" Gilded Age levels, even while actual taxes paid remain low.
As the austerity crisis (or fiscal cliff, fiscal slope, austerity bomb) negotiations heat up, keep the dragon in mind. In policymaking, it should matter the most. Low-wage workers need a hand now and unprecedenedly profitable corporations can afford to pay more for an unprecedentedly weak working class. We have another way forward, today's evidence bolsters the case for taking it.