I've compiled Bureau of Economic Analysis data for corporate profits
and employee compensation from 1948 through 2003.
I looked at four data items:
* Pretax corporate profits adjusted for inventory valuation and capital consumption
* After-tax corporate profits adjusted for inventory valuation and
capital consumption
* Total employee compensation.
* Employe compensation from wages and salaries (excluding stock options, etc.)
I pulled compensation data solely for corporate workers, excluding
those who work for sole proprietorships, governments, and other
employers. I thought this data would provide a better apples-to-apples
comparison.
Below, I have pasted growth numbers for each of the last five years
and annualized growth for three-, five-, 10-, 25-, 40-, and 55-year
periods. The 55-year period covers all the data from 1948 through
2003. I don't have 2004 compensation data broken out for only
corporate workers.
Before I give you the raw numbers, here are some interesting facts:
* Over the last 55 years, annual employee compensation has declined
just three times. Pretax corporate profits have fallen 19 times.
Profit growth is far more volatile than wage growth.
* Over the last three years, corporate profit growth has far
outstripped compensation growth.
* Over the long haul, compensation has increased at a faster rate than
corporate profits. In periods of 25 years or shorter, that trend has
fluctuated.
* In 1948, corporations paid out three times as much in compensation
as they earned in profits. In 2003, corporations paid out nearly five
times as much in compensation as they earned in profits.
* Corporations appear to be benefiting from tax changes, as after-tax
profit growth outstripped pretax profit growth in most periods.
* Nonsalary compensation has become far more important in recent
years, with basic wage and salary growth considerably lower than total
compensation growth over the last three- and five-year periods.
Now, here are the numbers. They don't fit neatly in this format, but
should work fine if you paste them into a spreadsheet:
2003 Growth 2002 Growth 2001 Growth 2000 Growth 1999 Growth 3-Yr.
Annualized Growth 5-Year Annualized Growth 10-Year Annualized
Growth 25-Year Annualized Growth 40-Year Annualized Growth 55-Year
Annualized Growth
Total Compensation 2.9% 0.4% 1.5% 8.6% 7.3% 1.6% 4.1% 5.2% 6.3% 7.6% 7.2%
Wages and Salaries 1.6% -1.4% 1.0% 8.5% 7.4% 0.4% 3.3% 5.1% 6.2% 7.3% 6.9%
Pretax Corporate Profits 17.8% 19.9% -11.1% -7.9% 4.5% 7.9% 3.9% 6.1% 6.1% 6.6% 6.3%
After-Tax Corporate Profits 14.3% 35.4% -3.3% -13.6% 4.6% 14.4% 6.2% 7.6% 7.1% 7.1% 6.7% |
