“CHART TWO: Wages as a percent of the economy are at an all-time low. Why are corporate profits so high? One reason is that companies are paying employees less than they ever have as a share of GDP. And that, in turn, is another reason the economy is so weak. Those ‘wages’ represent spending power for American consumers. American consumer spending is revenue for other companies. So the profit maximization obsession of American corporations is actually starving the rest of the economy of revenue growth.”
And from later in the article:
The Bottom Line
One of the big reasons the U.S. economy sucks is that, after three decades of ever-more obsessive focus on ‘shareholder value,’ our corporations and their owners have become myopic and greedy. Instead of investing in the future, and sharing more of their vast wealth with the people who generate it (their employees), they are hoarding their cash and maximizing their short-term profitability.
This business philosophy might–might–prop up their stock prices for the near-term.
But it’s also gutting the middle class and crippling the overall economy. And, in the process, ironically, it is constraining revenue growth for the same corporations that are trying to scrimp and save their way to maximized profitability.
It’s time for Americans to rethink our current business philosophy.”
Image source and article: http://www.businessinsider.com/why-economic-growth-is-so-slow-2013-7