OT: "If this is a knowledge economy, how come the brains aren't being compensated?"
- From: timepixdc <timepixdc@xxxxxxxx>
- Date: Fri, 31 Mar 2006 13:56:55 -0600
Profits surge to 40-year high
By Rex Nutting
(MarketWatch)
U.S. corporate profits have increased 21.3% in the past year and now
account for the largest share of national income in 40 years, the
Commerce Department said Thursday.
Strong productivity gains and subdued wage growth boosted before-tax
profits to 11.6% of national income in the fourth quarter of 2005, the
biggest share since the summer of 1966. See full story.
For all of 2005, before-tax profits totaled $1.35 trillion, up from
$1.16 trillion in 2004 and just $767 billion in 2001.
Meanwhile, the share of national income going to wage and salary workers
has fallen to 56.9%. Except for a brief period in 1997, that's the
lowest share for labor income since 1966.
"It's a big puzzle," said Josh Bivens, an economist for the Economic
Policy Institute. "If this is a knowledge economy, how come the brains
aren't being compensated? Instead, the owners of physical capital are
getting the rewards."
Despite the flood of cash coming in the door, corporations are investing
comparatively little in expanding their operations. Capital spending has
been below average, especially considering the strength of the economy,
the level of profits and the special tax breaks given to boost
investment.
In the fourth quarter, business fixed investment increased just 4.5%. In
the past year, investment has risen 6.8%. The growth rate has been
falling for the past four quarters.
.
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