Posts Tagged ‘wages’
“Ill fares the land, to hastening ills a prey, / Where wealth accumulates, and men decay”*…
Sasha Rogelberg marks a painful milestone…
The U.S. workforce has just made the type of history it likely wishes it didn’t. Working Americans are taking home the smallest percentage of economic output, 52.8%, since the Bureau of Labor Statistics began tracking the metric in 1947.
But as the share of wealth workers take home through wages—called labor share—is shrinking, corporate profits have exploded, with the S&P 500 index gaining 600% since the beginning of the century, while wages have increased just 12.5% over the same period, adjusted for inflation.
In other words: Corporations are raking in cash, but American workers are reaping less and less of the rewards.
The consequences associated with shrinking labor shares are now becoming tangible. A recent Government Accountability Office (GAO) report found that across the 11 states sampled, Amazon, the country’s largest company by revenue, has 12,346 workers on the Supplemental Nutrition Assistance Program (SNAP) and 11,338 relying on Medicaid. That was nearly triple the number of Amazon employees in need of federal assistance compared to 2020, when GAO conducted a similar report. During that same period, Amazon saw an increase in annual profits from $11.6 billion to $77.7 billion. Amazon’s 2025 revenue soared 12% year over year, from $638 billion to a record $717 billion…
… Walmart and FedEx saw similar increases in the number of workers taking federal assistance, as did ride-share and delivery companies.
Kathryn Larin, director for education, workforce, and income security issues at GAO, told Fortune the data illustrates that the Americans taking advantage of social safety net programs today are overwhelmingly in the workforce, with most working full-time. The income threshold for SNAP eligibility is about 130% of the poverty line, suggesting that despite many of these workers clocking in at their jobs, they still don’t have enough money to meet their basic needs…
… Diane Swonk, chief economist and managing director at KPMG, recently warned of the hidden consequences of a shrinking labor share, particularly that despite economic indicators suggesting the economy is stable, most Americans are facing an ongoing affordability crisis. KPMG found in February that since 1982, corporate profits as a share of U.S. GDP increased from 8% to 15.85%. During that same period, employee compensation as a share of U.S. GDP shrank from 66.6% to 61.9%.
“This chart from my recent Economic Compass still haunts me,” Swonk said in a social media post at the time. [See chart at the top of this post.] “A friend refers to it as the ‘revolution chart,’ which [is] disturbing but telling. Inequality fuels social and economic instability.”
This trend has been about 50 years in the making, according to Anna Stansbury, an assistant professor of work and organization studies at the MIT Sloan School of Management.
Fewer workers in the U.S. are represented by unions—20.1% of U.S. workers in 1983 compared to 10.0% in 2025—giving them fewer opportunities to bargain for salaries and benefits, she noted. But more so, Stansbury blames the fissuring of the workplace, or the breakdown of the employer-employee relationship. In the past, the typical employer-employee relationship would be that of direct employment: A worker for a company does their work at the company they are employed by. For example, a large bank like Bank of America used to employ a janitor to clean its offices.
But “in more and more cases, that’s not actually people’s experience of the workplace, particularly in lower middle-income jobs,” Stansbury told Fortune.
Instead, large workplaces like retailers and banks hire gig workers or subcontractors to complete jobs once done by direct employees: Companies hire a security provider, which employs a security guard to work outside that large company’s office. Delivery drivers are contract workers, not full-time employees.
As a result, companies don’t have to provide those workers equity or benefits. If a subcontractor violates labor law, the company contracting them is not liable. In the meantime, these large companies are not only saving money on benefits, but are also getting to argue that they are increasing efficiency by not spending resources on workers whose roles are not directly driving revenue, Stansbury explained. A bank should employ bankers, not janitors, to get the most bang for its buck, the thinking goes…
[Rogelberg examines the argument that AI is a material contributor to the lowering of wages (see also here)…]
… Stansbury has a slightly different theory about AI. While the technology could begin to have an aggregate impact on the labor market, it’s still too early to say whether today’s shrinking labor share is part of a broader economic cycle, or if it’s a secular event, she said.
Unexpected inflation spikes, like what is currently happening, are usually associated with poorer real wages. If inflation is less volatile in the coming years and wage growth recovers, today’s trend of shrinking labor share could turn out to be cyclical, Stansbury said.
On the other hand, Stansbury noted, a tightening labor market should increase labor share, and the labor market is already relatively tight. If inflation stabilizes, employment remains narrow, and the labor share increases, it will be a sign of an economic cycle completing itself. A bigger problem will be if wage growth stays low even if inflation improves and the labor market stays tight.
“If those two things happen and the labor share continues to fall,” she said, “then it would suggest that there’s actually been a secular shift, a secular acceleration in the downward trend.”…
“Amazon workers on food stamps have tripled despite its record revenue—and it’s just the latest evidence of the new economy of shrinking labor shares,” from @fortune.com.
See also: “The combination of economic inequality and economic segregation is deadly,” “No society can surely be flourishing and happy, of which by far the greater part of the numbers are poor and miserable,” and “It’s the economy, stupid.”
* Oliver Goldsmith, The Deserted Village (Read it for free on the Internet Archive)
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As we mind the gap, we might recall that it was on this date in 2011 that hundreds gathered in Zuccotti Park in the Financial District in Manhattan, to kick off the movement that became Occupy Wall Street by occupying the park. Fueled by wide distrust in the private sector after the Great Recession, the movement protested economic inequality, corporate greed, big finance, and the influence of money in politics. The OWS slogan was “We are the 99%.”
While the encampment, and the thousands who visited, were that anchor of the movement, Occupy Wall Street activists disseminated their message through social media, print magazines and newspapers (extant and OWS pop-ups like The Occupied Wall Street Journal), film, radio, and live streaming.
The protesters were forced out of Zuccotti Park on November 15, 2011– then turned their focus to occupying banks, corporate headquarters, board meetings, foreclosed homes, college and university campuses, and to social media.
“A man must always live by his work, and his wages must at least be sufficient to maintain him”*…
Nathan Yau is back with a(nother) arresting graphic analysis– this time, of the median salaries of different occupations in the U.S. (based on 2024– so, pre-purge— data from the Bureau of Labor Statistics). The median salary for full-time workers in the United States was $49,500; but salaries vary by occupation. The interactive infographic featured in the screengrab above shows– and allows you to explore– the spread…
Healthcare practitioners, such as surgeons and emergency medicine physicians, sit at the top. Airline pilot is the only occupation with a median salary above $220,000 that is not in the healthcare category. Then there are the CEOs and managers, followed by computer and math jobs. After that, most jobs sit below the $100,000-mark by median…
… The internet tends to skew our perception of how much people make. We see the things that people buy, but that is not always a good indicator for the wages people earn. These distributions are more bottom heavy than you might expect if you based your estimates on social media.
That said, all these jobs have a range of salaries, too. It’s not just variation within job categories, but variation for each job. The above charts, along with median salary, show 25th and 75th percentiles.
For example, construction supervisors make a median salary of $78,690, but 25% made $62,400 or less (25th percentile) and 75% made $100,200 or less (75th percentile).
There are also geographic differences, made more interesting by cost of living, but we’ll save that for another time…
Explore the comparative data: “Salary and Occupation” from @flowingdata.com.
It is, of course, important to remember (in a time like this, when so much attention is paid to the very rich) that this data excludes “unearned income,” the revenue that accrues to wealth (stocks, bonds, real estate, et al.) and the benefits of “contingent” stock/option bonuses. Along with inherited wealth, they explain most of the wealth gap (and economic angst) that plagues the U.S. today.
* Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
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As we investigate inequity, we might recall that on this date in 1859, Norton I distributed letters to the newspapers of San Francisco proclaiming himself Emperor of North America…
At the peremptory request and desire of a large majority of the citizens of these United States, I, Joshua Norton, formerly of Algoa Bay, Cape of Good Hope, and now for the last 9 years and 10 months past of S. F., Cal., declare and proclaim myself Emperor of these U. S.; and in virtue of the authority thereby in me vested, do hereby order and direct the representatives of the different States of the Union to assemble in Musical Hall, of this city, on the 1st day of Feb. next, then and there to make such alterations in the existing laws of the Union as may ameliorate the evils under which the country is laboring, and thereby cause confidence to exist, both at home and abroad, in our stability and integrity.
– NORTON I, Emperor of the United States.
“Only in our dreams are we free. The rest of the time we need wages.”*…
The Economist is repurposing one of its famous indices…
Since 1986 The Economist has produced the Big Mac index as a light-hearted gauge of whether currencies are at their “correct” level. The famous burger is a good test of currency valuations because of its global uniformity and ubiquity. The same properties make it a useful way of comparing international salaries: how many Big Macs, in principle, can a typical worker afford with their wages?
The more conventional way of comparing incomes is to convert wages in different countries into a common currency. But that is misleading because exchange rates are volatile. Moreover, one American dollar goes a lot farther in, say, the Philippines than it does in America itself. The Big Mac helps to solve this problem as a ready-made illustration of purchasing power: it represents a bundle of goods (or, rather, a bun of goods) that is identical everywhere, and so it serves as a yardstick of the real cost of things from country to country.
For the Big Mac wage analysis (the MacWage, for short), we started with full-time, pre-tax earnings in 2023 as reported by the OECD, a club of 38 mostly rich countries. We then made a simple adjustment, dividing wages by the price of a Big Mac—all in local currencies. That gave us the number of burgers that the average full-time worker can buy annually.
The results? Americans can perhaps be forgiven for having somewhat expansive waistlines. Although fast-food prices have rocketed since the pandemic, Americans still earn more greasy calories than any others in our analysis [chart below]. The average American worker takes home the equivalent of 14,000 Big Macs in wages for a year of full-time work. At 590 calories a pop, they could buy enough burgers to keep ten adults fed for a year. The Swiss and Danes come, respectively, second and third in MacWages. At the bottom are Mexican workers, who can afford to buy about 2,500 Big Macs with their average annual wages.
A standard objection to any measure of higher incomes in America is that its workers generally get less time off. To factor this in, we looked at average hours worked, based on data from the OECD and the Conference Board, a business-research group. This yields slightly different results (see chart 2). Americans still get more than enough Big Macs—pulling in the equivalent of about 7.4 per hour on the job—but they drop to third in the ranking. The burger champions are the Danes, who earn 8.1 per hour, followed by the Swiss. Looked at another way, the average Dane works for just seven minutes to make enough money to buy a Big Mac. In Mexico—still at the bottom of the rankings after this hourly adjustment—workers must toil for about 57 minutes.
The MacWage is, of course, far from perfect. Danes may celebrate their top performance, but our measure misses how income taxes (which can surpass 50% in Denmark) eat into their burger budgets. Much else of what goes into the cost of living, from housing to transportation, is also barely reflected in the price of burgers. In a developing country like Mexico, where housing is relatively cheap and American fast-food indulgences relatively expensive, a burger-based wage calculation understates how much stuff an average worker can actually afford. Still, as a quick method for comparing incomes around the world, the MacWage is easily digestible…
The purchasing power of average earners across the OECD: “An alternative use for The Economist’s Big Mac index” from @ECONdailycharts in @TheEconomist.
* Terry Pratchett
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As we supersize that, we might recall that it was on this date in 1979 that the U.S. government agreed to a bailout of the Chrysler Corporation. The smallest of the “Big Three” automakers, but still the 10th largest company in America, Chrysler suffering from a combination a bad management decisions and increased competition from Japanese and German automakers. Facing a $500 million loss for the year (and probably bankruptcy), newly-installed CEO Lee Iacocca asked the government for a guarantee on a $1.5 Billion loan package. In return for detailed plans from Chrysler detailing both how the company would right its ship and how other constituents (employees, suppliers, lenders) would make concessions, the Carter Administration (which feared that a Chrysler failure could lead to a “depression”– and depression-level unemployment– in the auto industry) agreed. In return for its guarantee, the government received stock warrants in the company.
Chrysler did turn itself around: it proceeded to introduce the “K-Car” line, then mini-vans, then the earliest generation of SUVs. The company repaid the government-guaranteed debt ahead of schedule; the Treasury made about $500 million on its warrants.
But of course, nearly thirty years later, in 2008, Chrysler received billions in a new bailout from the U.S. government in the aftermath of the financial crisis that decimated automotive sales over the following few years. Chrysler filed for Chapter 11 bankruptcy in April 2009, before being acquired in total by Fiat in 2014.
“This massive ascendancy of corporate power over democratic process is probably the most ominous development since the end of World War II”*…
Food is a major topic of conversation these days. Americans feel that they’re paying more for less, with explanations ranging from rising production costs and supply chain disruptions, to concentration among suppliers leading to profit-gouging. In an excerpt from his new book, Barons: Money, Power, and the Corruption of America’s Food Industry, Austin Frerick reminds us that, while those issues are all too real, the emergence of food behemoths has brought other issues as well…
Like the broader Gilded Age economy that Walmart exemplifies and has played a role in shaping, the wealth in Bentonville obscures the hardship surrounding it. After all, the Walton family has so much money to spend on museums and bike trails because they have extracted it from the communities in which Walmart operates—from shoppers but also from the company’s employees, the towns themselves, and even from taxpayers through a series of hidden government subsidies.
For example, as Walmart expanded its traditional stores into Supercenters, it would often construct a new, larger building nearby instead of simply adding on to the existing one. Those old stores frequently sat empty or underused, just like the original Walmart in Rogers. That may be why Walmart openings have been linked to declines in nearby home values.
Walmart and other major retailers have made the situation even worse by including restrictive covenants in the deeds of old buildings, which prevent other retailers from using the space for competitive purposes. These provisions perpetuate food deserts and tie the hands of communities struggling to figure out what to do with these ghost buildings. After all, it’s not easy to find a use for an old Walmart that doesn’t involve grocery or retail. One former Walmart Supercenter in Brownsville, Texas, became the center of a national debate when it was bought by a firm detaining migrant children.
Limiting competition is apparently not enough for Walmart. The company understands what happens to communities when its stores are abandoned, and it uses this knowledge to leverage a tax break. The company often engages in what is known as the “dark stores” loophole, a tax dodge that lets it evade millions in property taxes by valuing its stores as if they were closed.
These shenanigans further tilt the scales in Walmart’s favor and deprive local communities of needed tax revenue. They are particularly egregious in light of the fact that many of their stores were built with massive taxpayer subsidies in the first place. Of course, this isn’t the only tax loophole the family has exploited. In 2013, Bloomberg reported that the family pioneered an estate tax loophole that is now widely used by American billionaires.
As bad as Walmart is for communities as a whole, it creates conditions that are particularly damaging for workers. As labor historian Nelson Lichtenstein noted, Sam Walton built a company rooted in a “southernized, deunionized post-New Deal America.” Walmart has long been defined by transnational commerce, employment insecurity, and poverty-level wages, which is an ironic geographic twist on history given that the region was at the heart of the New Deal and the antichain movement.
Walmart employs about 1.6 million people in the United States alone, making it the nation’s largest private employer. In fact, more people are on the company’s payroll than the populations of eleven states. The company’s impact on the labor market is so big that it drives down wages in the areas in which it builds Supercenters. In the words of one academic, Walmart effectively “determine[s] the real minimum wage” in the country. That’s why it’s national news when the company decides to raise wages.
From its founding, Walmart has been notorious for its poverty-level wages; in its early years, the company exploited a loophole in order to pay the mostly female store employees half of the federal minimum wage. It took a federal court battle for the workers to receive the minimum wage. In 2021, Walmart employees’ median income was about $25,000, whereas CEO Doug McMillon took home $25.7 million that year.
Given this history, it should come as no surprise that Sam Walton hated unions. “I have always believed strongly that we don’t need unions at Wal-Mart,” he stated in his memoir. Over the years, the company has aggressively fought efforts to unionize, and it seemingly closes stores whenever they gain traction. For example, after deli counter workers in a Texas Walmart Supercenter voted to unionize in 2000, the company switched to prepackaged meat and closed the department. In 2015, Walmart suddenly closed five stores to deal with what it said were extensive plumbing issues, which it said would take six months to fix. Some speculated that the real reason it closed the stores was to let the employees go as retaliation for labor activism.
And it’s not just labor laws that the company has eluded. A 2017 report based on a survey of over one thousand Walmart employees found that the company was likely violating worker protections such as the Americans with Disabilities Act and the Family and Medical Leave Act, among others. According to the New York Times, the company “routinely refuses to accept doctors’ notes, penalizes workers who need to take care of a sick family member and otherwise punishes employees for lawful absences.”
As the company’s power grew, it reshaped labor options and norms for millions of Americans. Gary Chaison, a labor expert, told the New York Times in 2015, “What you’re increasingly finding is that it’s the primary wage earners who work at Walmart, because a lot of workers have more or less given up on getting middle-class jobs.” Meanwhile, many older Americans are working at the store past the normal retirement age because of their financial insecurity, a sad reality reflected by the recent TikTok trend of elderly Walmart employees asking for donations.
This power imbalance between Walmart and its employees explains the poverty-level wages for many of Walmart’s 1.6 million workers but also for employees of its competitors. Some unionized grocery stores have even used the opening of a Supercenter as an excuse to demand cuts to their own employees’ wages and benefits.
These low wages also obscure a generous hidden subsidy that the company receives from taxpayers. Many Walmart workers depend on government public assistance programs such as Medicaid (health care), the Earned Income Tax Credit (a low-wage tax subsidy), Section 8 vouchers (housing assistance), LIHEAP (energy assistance), and SNAP (food assistance), among others. In 2013, one estimate by congressional House Democrats found that taxpayers subsidized Walmart to the tune of more than $5,000 per employee each year through all of the government assistance programs that its workers need.
In effect, instead of paying a living wage to these employees, the Walton family shifts the burden onto taxpayers. Although many people may recoil at the idea of the public filling the gap between Walmart’s pay and the income its workers need to survive, not all policymakers see an issue with this sort of billionaire welfare. Jason Furman, former chair of the Council of Economic Advisers under President Obama, wrote a paper before joining the administration titled “Wal-Mart: A Progressive Success Story” that called for even more of these subsidies to Walmart’s bottom line.
There is, of course, another way to address the issue. Walmart failed to establish dominance in Germany because of the country’s strong labor protections and antitrust guardrails. These market protections may explain why the company eventually threw in the towel and sold off its operations there.
In some instances, Walmart even receives a double subsidy. Its workers and shoppers frequently rely on SNAP, the Supplemental Nutrition Assistance Program, formerly known as “food stamps.” The program originated as part of the New Deal as a temporary measure and was made permanent by President Lyndon Johnson in a bill signed in 1964. This program and several smaller food assistance programs are now part of the Farm Bill. In fact, these food assistance programs make up more than 75 percent of the most recent Farm Bill.
SNAP is in many ways a triumph of progressive social policy, with an average of 41.2 million people participating in the program each month in 2022. The use rate is so high because, unlike many other programs, SNAP was structured by the US Congress so that anyone who qualifies is guaranteed to receive assistance. As a result, the program is a lifeline for millions of Americans who might otherwise struggle to put food on the table.
But because of Walmart’s dominance of the grocery sector, a very large portion of SNAP dollars now run through the company’s cash registers. In 2013, the company received $13 billion in sales from shoppers using SNAP. By comparison, farmers markets took in only $17.4 million of all SNAP spending that same year. The amount of SNAP money received by the company surged with the expansion of SNAP benefits in response to the COVID-19 pandemic. With some back-of-the-envelope math, I came up with a rough estimate that Walmart now receives somewhere around $26.8 billion each year from SNAP.
Unfortunately, more concrete numbers are not available because the US Supreme Court has ruled that the amount of taxpayer money that the company receives from SNAP can be kept secret. In 2019, the Court heard a case involving the USDA’s decision to deny a request by a South Dakota newspaper for this information. “Most of the time, the government tells the public which companies benefit from federal dollars earmarked for taxpayer-funded public assistance programs,” agriculture and food reporter Claire Brown noted. “We know which insurance companies make the highest profits from Medicare and Medicaid, for example, and those figures have been used to pressure them to offer better options to their clients.” But in this instance, the Court rejected this level of transparency, with Justice Elena Kagan joining the Republican-appointed members of the Court to uphold the USDA decision under the notion that it was “confidential” business information.
The program is important enough that it factors into Walmart’s operational decision-making. Many Americans enrolled in SNAP schedule their trips to the grocery store around the days when their funds get deposited. In fact, the company factors this bump into its ordering system…
Expensive food is only one of the prices we pay to “Food Barons“– @AustinFrerick in @ProMarket_org.
* “This massive ascendancy of corporate power over democratic process is probably the most ominous development since the end of World War II, and for the most part “the free world” seems to be regarding it as merely normal.” – Wendell Berry, Bringing it to the Table: On Farming and Food
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As we ponder the point at which profit becomes predation, we might recall that it was on this date in 1950 that Hormel registered the name and trademark “Spam” for its canned meat product. It is also interesting to note that the company had marketed the product since 1937, and only felt the need to protect the name 13 years later.
“Economic problems have no sharp edges. They shade off imperceptibly into politics, sociology, and ethics. Indeed, it is hardly an exaggeration to say that the ultimate answer to every economic problem lies in some other field.”*…
The number of households that live above the poverty line but are barely scraping by is ticking higher…
Over time, higher costs and sluggish wage growth have left more Americans financially vulnerable, with many known as “ALICEs.”
Nearly 40 million families, or 29% of the population, fall in the category of ALICE — Asset Limited, Income Constrained, Employed — according to United Way’s United for ALICE program, which first coined the term to refer to households earning above the poverty line but less than what’s needed to get by.
That figure doesn’t include the 37.9 million Americans [individuals, as opposed to families as measured above] who live in poverty, comprising 11.5% of the total population, according to data from the U.S. Census Bureau.
“ALICE is the nation’s child-care workers, home health aides and cashiers heralded during the pandemic — those working low-wage jobs, with little or no savings and one emergency from poverty,” said Stephanie Hoopes, national director at United for ALICE…
Read on for an explanation of how high inflation and higher interest rates have aggravated what was already a problem: “29% of households have jobs but struggle to cover basic needs,” from @CNBC.
Apposite: “Millions of Americans are about to lose internet access, and Congress is to blame.”
(Image above: source)
***
As we knit a safety net, we might recall that, on this date in 2020, as a product of the COVID-19 recession, the U.S. unemployment rate to hit 14.9 percent, its worst rate since the Great Depression. Federal legislators enacted six major bills, centered on the American Rescue Plan and costing about $5.3 trillion, to help manage the pandemic and mitigate the economic burden on families and businesses. Those programs have now expired.
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