It’s May Day.
In America, to the extent anyone notices May Day, they notice the sunshine and spring weather.
Elsewhere in the world, however, May Day is all about celebrating the cause (and grievances) of the world’s employees.
And because most people in the world are (or want to be) employees, May Day is something a lot of folks can relate to.
And, boy, do the world’s employees have something to be annoyed about this year!
In case you don’t immediately know what that is, here are three charts for you. They’re based on America’s economy, but it’s the same story in a lot of countries around the world.
1) Corporate profit margins just hit another all-time high. Companies are making more per dollar of sales than they ever have before. If you’re a shareholder, that seems like good news (in the very short term, anyway). Alas, most people aren’t shareholders. And for folks whose investment horizon is longer than “this quarter” and “this year,” it’s actually bad news. Companies are under-investing in their employees and the future.
2) Wages as a per cent of the economy just hit another all-time low. One reason companies are making so much money is that they’re paying employees less than they ever have as a share of GDP. That’s bad news for everyone, by the way, not just employees. Low employee wages are one reason the economy is so weak: Those “wages” are represent spending power for consumers. And consumer spending is “revenue” for other companies. So the short-term corporate profit obsession is actually starving the rest of the economy of revenue growth.
3) Fewer Americans are working than at any time in the past three decades. The other reason corporations are so profitable is that they don’t employ as many Americans as they used to. As a result, the employment-to-population ratio has collapsed. We’re back at 1980s levels now.
In short, our current obsessed-with-profits philosophy is creating a country of a few million overlords (shareholders) and 300+ million serfs (employees).
It is also resulting in employees sharing less of the corporate wealth that they spend their lives creating than they ever have before.
That’s not what has made America a great country. It’s also not what most people think America or other lands of opportunity are supposed to be about.
So we might want to rethink that.
Specifically, we might want to have the goal of our corporations be to create long-term value for all of their constituencies (customers, employees, and shareholders), not just short-term profit for their shareholders.
Meanwhile, if you want to know more about what’s wrong with the economy, and why our current obsession with short-term-profit is hurting all of us, flip through these charts:
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