That’s a great run of fortune – a swing of four percentage points of GDP toward corporate profits.
Corporate profits after taxes rose from $450 billion in 2000, exceeded $700 billion in 2008, and last year cleared $1.7 trillion. The table below shows the rebalancing away from pay to workers and into business profits. At the same time, wage and salary compensation decreased as a share of GDP. Profits after taxes as a share of GDP came close to doubling in the few years between 20. Employers can shoulder higher pay and continue to see very high profits.īusiness profits soared since the 1980s and from the Great Recession to today. And for much of the past four decades, wage growth has lagged behind productivity gains as well. The shift to service economy jobs or loss of manufacturing does not account for this trend as the track for college educated and full-time workers differs only slightly from the median wage trend for service workers. Where is the evidence you’d expect to see of overheating demand for workers? If workers are indeed in short supply and businesses are competing to hire, then why are wages and salaries not doing far better? As the chart from the Federal Reserve below documents, median wages not only took a huge downward hit in the Great Recession, they are, even these many years later, far from reaching the trend lines for the past few decades. Combined, this 10.8 million is the reserve pool of workers that might be engaged. If today’s economy were revving at the higher participation rate of 2010, 5.8 million more individuals would be found on the payrolls.Īnother 4.8 million are working (and therefore counted as being within the labor force), but are part-time employees for economic reasons when they’d prefer full-time posts. A strong economy should pull individuals “off the bench” and back to paid work. Between 19 (excluding recessions), the labor force participation rate averaged 66.6 percent.
#WHEN WAS THE LAST WORKER SHORTAGE IN US FULL#
The percentage of the labor force that is employed fell a full two percentage points in the same period (from 64.8 percent to 62.7 percent). But during the same time, the labor market participation rate continued to slide. The 20 million increase in jobs between 20 was a huge relief. That’s the alarming fact hidden in plain sight within the good news of job growth. With millions of workers disengaged from jobs, can this be a real “worker shortage?” Maybe we should respond to the lowered participation rate by addressing lagging wages and salaries and repairing the fraying social contract to attract those millions back into the labor force.Ĭonsider this: There can’t be a labor shortage when 5.8 million workers are missing in action. Yet there should be at least 5.8 million more people at work. There is a net growth in total employment. Let’s consider taking the alarm level over worker shortages down some decibels. The fears of a tightening labor market and rising inflation led Federal Reserve Chair Janet Yellen to say in November 2017 that interest rates would continue to slowly rise. Employers are reporting difficulty hiring qualified workers, and some regional markets have high numbers of job openings unfilled. There’s consistent talk about worker shortages. And yet, America’s labor market participation rates have continued to slump since the Great Recession. The economy is growing, the stock market is rising, and job growth is fairly consistent, month after month.
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