[Home Guy]

http://economix.blogs.nytimes.com/20...able-recovery/

The Wageless, Profitable Recovery
By STEVEN GREENHOUSE

Economists at Northeastern University have found that the current
economic recovery in the United States has been unusually skewed in
favor of corporate profits and against increased wages for workers.

In their newly released study, the Northeastern economists found that
since the recovery began in June 2009 following a deep 18-month
recession, “corporate profits captured 88 percent of the growth in real
national income while aggregate wages and salaries accounted for only
slightly more than 1 percent” of that growth.

The study, “The ‘Jobless and Wageless Recovery’ From the Great Recession
of 2007-2009,” said it was “unprecedented” for American workers to
receive such a tiny share of national income growth during a recovery.

According to the study, between the second quarter of 2009, when the
recovery began, and the fourth quarter of 2010, national income rose by
$528 billion, with $464 billion of that growth going to pretax corporate
profits, while just $7 billion went to aggregate wages and salaries,
after accounting for inflation.

The share of income growth going to employee compensation was far lower
than in the four other economic recoveries that have occurred over the
last three decades, the study found.

“The lack of any net job growth in the current recovery combined with
stagnant real hourly and weekly wages is responsible for this unique,
devastating outcome,” wrote the report’s authors, Andrew Sum, Ishwar
Khatiwada, Joseph McLaughlin and Sheila Palma.

According to the Bureau of Labor Statistics, average real hourly
earnings for all employees actually declined by 1.1 percent from June
2009, when the recovery began, to May 2011, the month for which the most
recent earnings numbers are available.

The authors said another factor explaining the weak performance for
aggregate wages and salaries was the slow growth in weekly hours during
the recovery. At the same time, worker productivity has grown just under
6 percent since the recovery began, helping to keep employment down
while lifting corporate profits, the study said.

Professor Sum noted that the aggregate wage and salary figures exclude
employer contributions to benefits and payroll taxes, while they include
bonuses, overtime, commissions and tips.

He said that nonwage benefits rose in real terms by $27 billion during
the first seven quarters of the recovery. “These small gains were
exactly offset by a similar $27 billion loss in real wages and salaries
over the same time period based on newly released data from the Bureau
of Economic Analysis,” he said. “It was a wageless and jobless
recovery.”

The study called that $27 billion loss in aggregate wages and salaries
during the seven quarters after the recovery began “the first ever such
decline in any post-World War II recovery.”

The study said that of the previous recoveries since the 1970s, the
recovery following the 2000-1 recession was next worst in terms of the
share of increased income going to wages and salaries. The study found
that 15 percent of income growth went to aggregate wages and salaries in
the six quarters after the recovery began following that recession,
while 53 percent went to corporate profits. The growth in national
income can also go to net interest, rental income or proprietors’
income.

The story was very different for the recovery that began in 1991. In
that recovery, 50 percent of the growth in national income went to wages
and salaries during the first six quarters after the recession ended,
while corporate profits actually fell by 1 percent during that period.

With regard to corporate profits, the report noted that the preliminary
estimate for the first quarter of 2011 was $1.668 trillion, an increase
of $465 billion of just under 40 percent since the recovery began.

“Aggregate employment still has not increased above the trough quarter
of 2009, and real hourly and weekly wages have been flat to modestly
negative,” the report concludes. “The only major beneficiaries of the
recovery have been corporate profits and the stock market and its
shareholders.”

[Home Guy]

Home Guy wrote:

With regard to corporate profits, the report noted that the
preliminary estimate for the first quarter of 2011 was $1.668
trillion, an increase of $465 billion of just under 40 percent
since the recovery began.

On a related note:

Microsoft, Apple, Google ask Congress for tax holiday
http://blog.seattlepi.com/microsoft/...r-tax-holiday/

Microsoft is among several U.S. corporations, including Apple and
Google, that are lobbying Congress for a year-long income tax holiday
that would allow them to transfer offshore cash to the United States at
a lower tax rate, The New York Times reports.

Microsoft has $29 billion in offshore cash, for example, and is paying
the $8.5 billion for Luxembourg-based Skype with offshore funds. The
companies are asking for a one-year rate reduction on international
revenue from 35 percent to 5.25 percent, saying the break would inject
much-needed trillions into the U.S. economy, the Times reports.

However, the newspaper points out, the Bush administration offered a
similar tax holiday in 2005, and 92 percent of the money was returned to
shareholders. A study by the National Bureau of Economic Research found
the program “did not increase domestic investment, employment or
research and development.

====================

http://www.nytimes.com/2011/06/20/bu...x.html?_r=3&hp

“For every billion dollars that we invest, that creates 15,000 to 20,000
jobs either directly or indirectly,” Jim Rogers, the chief of Duke
Energy, said at the conference. Duke has $1.3 billion in profits
overseas.

But that’s not how it worked last time. Congress and the Bush
administration offered companies a similar tax incentive, in 2005, in
hopes of spurring domestic hiring and investment, and 800 took
advantage.

Though the tax break lured them into bringing $312 billion back to the
United States, 92 percent of that money was returned to shareholders in
the form of dividends and stock buybacks, according to a study by the
nonpartisan National Bureau of Economic Research.

This money comes from overseas operations and in some cases accounting
maneuvers that shift domestic profits to low-tax countries. The study
concluded that the program “did not increase domestic investment,
employment or research and development.”

Indeed, 60 percent of the benefits went to just 15 of the largest United
States multinational companies — many of which laid off domestic
workers, closed plants and shifted even more of their profits and
resources abroad in hopes of cashing in on the next repatriation
holiday.

Merck, the pharmaceutical giant based in Whitehouse Station, N.J., was
one of those big winners. The company brought home $15.9 billion, second
overall to Pfizer’s $37 billion. It used the money for “U.S.-based
research and development spending, capital investments in U.S. plants,
and salaries and wages for the U.S.,” a Merck spokesman, Steven
Campanini, said last week.

According to regulatory filings, though, the company cut its work force
and capital spending in this country in the three years that followed.

Merck used the cash infusion to continue paying dividends and buying
back stock for the benefit of shareholders and executives — even as it
was rocked by more than $8 billion in costs to settle a variety of
disputes after executive missteps. Merck had to pay billions in back
taxes to the I.R.S.; billions more to consumers suing because of the
dangerous side effects of the painkiller Vioxx, and hundreds of millions
to the Justice Department, which had accused the company of defrauding
Medicare.

The tax break, part of the American Jobs Creation Act, lacked safeguards
to ensure the companies used the money for investment and job creation
in the United States, as Congress intended. “There were no direct
tracing requirements,” said Jay B. Schwartz, head of Merck’s
international tax unit until 2006. “So once the money came home, it gave
you great flexibility.”

[Higgs Boson[_2_]]

On Oct 1, 6:34*am, Home Guy wrote:
http://economix.blogs.nytimes.com/20...ss-profitable-...

The Wageless, Profitable Recovery
By STEVEN GREENHOUSE

Economists at Northeastern University have found that the current
economic recovery in the United States has been unusually skewed in
favor of corporate profits and against increased wages for workers.

I'm shocked! Shocked!!!

[...]

HB

[Mark]

Economists at Northeastern University have found that the current
economic recovery in the United States has been unusually skewed in
favor of corporate profits and against increased wages for workers.



I think change will come when American workers realize that they have
power as American consumers.

If the big corps don't pay the workers well, stop buying their stuff.

Mark

[[email protected][_2_]]

On Oct 1, 9:43*am, Home Guy wrote:
Home Guy wrote:
With regard to corporate profits, the report noted that the
preliminary estimate for the first quarter of 2011 was $1.668
trillion, an increase of $465 billion of just under 40 percent
since the recovery began.

On a related note:

Microsoft, Apple, Google ask Congress for tax holidayhttp://blog.seattlepi.com/microsoft/2011/06/20/microsoft-apple-google...

Microsoft is among several U.S. corporations, including Apple and
Google, that are lobbying Congress for a year-long income tax holiday
that would allow them to transfer offshore cash to the United States at
a lower tax rate, The New York Times reports.

Microsoft has $29 billion in offshore cash, for example, and is paying
the $8.5 billion for Luxembourg-based Skype with offshore funds. The
companies are asking for a one-year rate reduction on international
revenue from 35 percent to 5.25 percent, saying the break would inject
much-needed trillions into the U.S. economy, the Times reports.

This is something I've been saying is an obvious step that could bring
an immediate boost to the US economy. It should have been done long
ago. Instead all we hear is carping about the amount of profits US
companies keep abroad to avoid paying taxes. Reducing the tax rate
so that they would bring the money back and use it here would be
a clear boost to the economy. Besides the cash itself, it would also
send a positive message to business, instead of the demonizing of
late.

Another similar step would be to shorten the depreciation schedule and
allow any investments made in the next year to be written off over the
next two or three years instead of the normal longer schedule. That
would give businesses that are considering capital expenditures a
solid reason to do it now.





However, the newspaper points out, the Bush administration offered a
similar tax holiday in 2005, and 92 percent of the money was returned to
shareholders. A study by the National Bureau of Economic Research found
the program “did not increase domestic investment, employment or
research and development.

Even if it's returned to shareholders it's money in their pockets.
And unlike Obama's proposed $500mil new stimulus, it doesn't
increase the deficit. If you wanted to you could make the tax
break conditional that the money is used on capital expenditures,
hiring, etc, but as always that is difficult to track and determine.






====================

http://www.nytimes.com/2011/06/20/bu...x.html?_r=3&hp

“For every billion dollars that we invest, that creates 15,000 to 20,000
jobs either directly or indirectly,” Jim Rogers, the chief of Duke
Energy, said at the conference. Duke has $1.3 billion in profits
overseas.

But that’s not how it worked last time. Congress and the Bush
administration offered companies a similar tax incentive, in 2005, in
hopes of spurring domestic hiring and investment, and 800 took
advantage.

Though the tax break lured them into bringing $312 billion back to the
United States, 92 percent of that money was returned to shareholders in
the form of dividends and stock buybacks, according to a study by the
nonpartisan National Bureau of Economic Research.

This money comes from overseas operations and in some cases accounting
maneuvers that shift domestic profits to low-tax countries. The study
concluded that the program “did not increase domestic investment,
employment or research and development.”

Indeed, 60 percent of the benefits went to just 15 of the largest United
States multinational companies — many of which laid off domestic
workers, closed plants and shifted even more of their profits and
resources abroad in hopes of cashing in on the next repatriation
holiday.

Merck, the pharmaceutical giant based in Whitehouse Station, N.J., was
one of those big winners. The company brought home $15.9 billion, second
overall to Pfizer’s $37 billion. It used the money for “U.S.-based
research and development spending, capital investments in U.S. plants,
and salaries and wages for the U.S.,” a Merck spokesman, Steven
Campanini, said last week.

According to regulatory filings, though, the company cut its work force
and capital spending in this country in the three years that followed.

Merck used the cash infusion to continue paying dividends and buying
back stock for the benefit of shareholders and executives — even as it
was rocked by more than $8 billion in costs to settle a variety of
disputes after executive missteps. Merck had to pay billions in back
taxes to the I.R.S.; billions more to consumers suing because of the
dangerous side effects of the painkiller Vioxx, and hundreds of millions
to the Justice Department, which had accused the company of defrauding
Medicare.

The tax break, part of the American Jobs Creation Act, lacked safeguards
to ensure the companies used the money for investment and job creation
in the United States, as Congress intended. “There were no direct
tracing requirements,” said Jay B. Schwartz, head of Merck’s
international tax unit until 2006. “So once the money came home, it gave
you great flexibility.”

[Steven L.[_2_]]

" wrote in message
:

On Oct 1, 9:43*am, Home Guy wrote:
Home Guy wrote:
With regard to corporate profits, the report noted that the
preliminary estimate for the first quarter of 2011 was $1.668
trillion, an increase of $465 billion of just under 40 percent
since the recovery began.

On a related note:

Microsoft, Apple, Google ask Congress for tax holidayhttp://blog.seattlepi.com/microsoft/2011/06/20/microsoft-apple-google...

Microsoft is among several U.S. corporations, including Apple and
Google, that are lobbying Congress for a year-long income tax holiday
that would allow them to transfer offshore cash to the United States at
a lower tax rate, The New York Times reports.

Microsoft has $29 billion in offshore cash, for example, and is paying
the $8.5 billion for Luxembourg-based Skype with offshore funds. The
companies are asking for a one-year rate reduction on international
revenue from 35 percent to 5.25 percent, saying the break would inject
much-needed trillions into the U.S. economy, the Times reports.

This is something I've been saying is an obvious step that could bring
an immediate boost to the US economy. It should have been done long
ago. Instead all we hear is carping about the amount of profits US
companies keep abroad to avoid paying taxes. Reducing the tax rate
so that they would bring the money back and use it here would be
a clear boost to the economy. Besides the cash itself, it would also
send a positive message to business, instead of the demonizing of
late.

What makes you think they would bring the money back to America even if
taxes were lowered somewhat?

Taxes would have to be lowered by a tremendous amount to compensate for
the wage differential between the U.S. and the developing world; and to
compensate for the higher costs here due to health care and
environmental regulations. I don't think we can lower taxes that much
without blowing another big hole in the Federal budget.





-- Steven L.

[[email protected]]

On Sun, 2 Oct 2011 15:42:54 +0000, "Steven L." wrote:



" wrote in message
:

On Oct 1, 9:43*am, Home Guy wrote:
Home Guy wrote:
With regard to corporate profits, the report noted that the
preliminary estimate for the first quarter of 2011 was $1.668
trillion, an increase of $465 billion of just under 40 percent
since the recovery began.

On a related note:

Microsoft, Apple, Google ask Congress for tax holidayhttp://blog.seattlepi.com/microsoft/2011/06/20/microsoft-apple-google...

Microsoft is among several U.S. corporations, including Apple and
Google, that are lobbying Congress for a year-long income tax holiday
that would allow them to transfer offshore cash to the United States at
a lower tax rate, The New York Times reports.

Microsoft has $29 billion in offshore cash, for example, and is paying
the $8.5 billion for Luxembourg-based Skype with offshore funds. The
companies are asking for a one-year rate reduction on international
revenue from 35 percent to 5.25 percent, saying the break would inject
much-needed trillions into the U.S. economy, the Times reports.

This is something I've been saying is an obvious step that could bring
an immediate boost to the US economy. It should have been done long
ago. Instead all we hear is carping about the amount of profits US
companies keep abroad to avoid paying taxes. Reducing the tax rate
so that they would bring the money back and use it here would be
a clear boost to the economy. Besides the cash itself, it would also
send a positive message to business, instead of the demonizing of
late.

What makes you think they would bring the money back to America even if
taxes were lowered somewhat?

Because, while the US is a dangerous place for money right now, the rest of
the world is worse. There should be *NO* tax on repatriating money. It's
already been taxed. It's counterproductive to keep it out. It nets zero
revenue now.

Taxes would have to be lowered by a tremendous amount to compensate for
the wage differential between the U.S. and the developing world; and to
compensate for the higher costs here due to health care and
environmental regulations. I don't think we can lower taxes that much
without blowing another big hole in the Federal budge.

Strawman.

[Ed Pawlowski]

"Steven L." wrote
Microsoft has $29 billion in offshore cash, for example, and is paying
the $8.5 billion for Luxembourg-based Skype with offshore funds.

What makes you think they would bring the money back to America even if
taxes were lowered somewhat?

Simple. The money will go where the taxes are low. The US can get 5% of
billions, or 35% of nothing. Which is the smarter move?


I don't think we can lower taxes that much without blowing another big
hole in the Federal budget.


See above. 5% of billions or 34% of nothing.

[HeyBub[_3_]]

Steven L. wrote:

What makes you think they would bring the money back to America even
if taxes were lowered somewhat?

Taxes would have to be lowered by a tremendous amount to compensate
for the wage differential between the U.S. and the developing world;
and to compensate for the higher costs here due to health care and
environmental regulations. I don't think we can lower taxes that much
without blowing another big hole in the Federal budget.


Taxes SHOULD be lowered a tremendous amount!

The current corporate tax rate in the U.S. is between 35-47%, depending on
the state. At the federal level only, our 35% corporate tax rate is second
only to Japan amongst civilized countries.

[Kurt Ullman]

In article ,
"HeyBub" wrote:


Taxes SHOULD be lowered a tremendous amount!

The current corporate tax rate in the U.S. is between 35-47%, depending on
the state. At the federal level only, our 35% corporate tax rate is second
only to Japan amongst civilized countries.

THIS is the reason they don't want to bring it home. BTW: Someone
mentioned double taxation, and for most places they can take a credit
for foreign taxes paid. It is just that if they have to pay the
additional to bring it home, they won't.

--
People thought cybersex was a safe alternative,
until patients started presenting with sexually
acquired carpal tunnel syndrome.-Howard Berkowitz

[John Gilmer[_3_]]

On 10/1/2011 8:29 PM, Mark wrote:

Economists at Northeastern University have found that the current
economic recovery in the United States has been unusually skewed in
favor of corporate profits and against increased wages for workers.



I think change will come when American workers realize that they have
power as American consumers.

If the big corps don't pay the workers well, stop buying their stuff.

There you go!

Actually, given a choice, most Americans would buy from a corporation
that doesn't pay its worker "well."

[Ed Pawlowski]

"John Gilmer" wrote

If the big corps don't pay the workers well, stop buying their stuff.

There you go!

Actually, given a choice, most Americans would buy from a corporation that
doesn't pay its worker "well."

We prove that every day. We complain about jobs going to China, then we go
searching for the lowest possible price for what we want to buy. The stores
doing well in this country are Wal Mart and Amazon because we'd rather save
a few dollars and let the local retailer go out of business.

Sometimes, it is difficult NOT to do that. This past summer I bought an
item on line and saved over $400. For 50 bucks, I'd go local; for 400, I'm
going where I can save.

[[email protected][_2_]]

On Oct 2, 11:42*am, "Steven L." wrote:
" wrote in message

:





On Oct 1, 9:43*am, Home Guy wrote:
Home Guy wrote:
With regard to corporate profits, the report noted that the
preliminary estimate for the first quarter of 2011 was $1.668
trillion, an increase of $465 billion of just under 40 percent
since the recovery began.

On a related note:

Microsoft, Apple, Google ask Congress for tax holidayhttp://blog.seattlepi.com/microsoft/2011/06/20/microsoft-apple-google...

Microsoft is among several U.S. corporations, including Apple and
Google, that are lobbying Congress for a year-long income tax holiday
that would allow them to transfer offshore cash to the United States at
a lower tax rate, The New York Times reports.

Microsoft has $29 billion in offshore cash, for example, and is paying
the $8.5 billion for Luxembourg-based Skype with offshore funds. The
companies are asking for a one-year rate reduction on international
revenue from 35 percent to 5.25 percent, saying the break would inject
much-needed trillions into the U.S. economy, the Times reports.

This is something I've been saying is an obvious step that could bring
an immediate boost to the US economy. *It should have been done long
ago. *Instead all we hear is carping about the amount of profits US
companies keep abroad to avoid paying taxes. *Reducing the tax rate
so that they would bring the money back and use it here would be
a clear boost to the economy. *Besides the cash itself, it would also
send a positive message to business, instead of the demonizing of
late.

What makes you think they would bring the money back to America even if
taxes were lowered somewhat?

Because if you read the article, when it was done in 2005
the money was brought back.



Taxes would have to be lowered by a tremendous amount to compensate for
the wage differential between the U.S. and the developing world; and to
compensate for the higher costs here due to health care and
environmental regulations.

It's not that the money has to be used to go head to head
in competitions were the USA is at a clear disadvantage.
It's a case where a company like Microsoft or Boeing could
use that money here as they see fit. It could be anything
from building a new office building, to funding new startups,
as examples.



*I don't think we can lower taxes that much
without blowing another big hole in the Federal budget.

Right now the USA is getting zero on that money abroad,
so it has no effect on the budget.




-- Steven L.- Hide quoted text -

- Show quoted text -

[[email protected][_2_]]

On Oct 3, 1:34*am, "Ed Pawlowski" wrote:
"John Gilmer" wrote



If the big corps don't pay the workers well, stop buying their stuff.

There you go!

Actually, given a choice, most Americans would buy from a corporation that
doesn't pay its worker "well."

We prove that every day. We complain about jobs going to China, then we go
searching for the lowest possible price for what we want to buy. *The stores
doing well in this country are Wal Mart and Amazon because we'd rather save
a few dollars and let the local retailer go out of business.

What makes you think the local retailer is offering wages
that are much different from Walmart? As for the products
the local retailers stores are as chocked full of products
from China as are Walmart.



Sometimes, it is difficult NOT to do that. *This past summer I bought an
item on line and saved over $400. *For 50 bucks, I'd go local; for 400, I'm
going where I can save.

[HeyBub[_3_]]

Ed Pawlowski wrote:

We prove that every day. We complain about jobs going to China, then
we go searching for the lowest possible price for what we want to
buy. The stores doing well in this country are Wal Mart and Amazon
because we'd rather save a few dollars and let the local retailer go
out of business.

China vs. U.S. In my view, this is not a zero-sum game. From our side, we
get cheaper products than the domestic variety. From China's side, they get
revenue that they can use to buy something created in the U.S.

There is NO ideological difference between choosing to buy from China and
choosing to buy from a guy in the next town. It's called competition.

[Kurt Ullman]

In article ,
"Ed Pawlowski" wrote:

We prove that every day. We complain about jobs going to China, then we go
searching for the lowest possible price for what we want to buy. The stores
doing well in this country are Wal Mart and Amazon because we'd rather save
a few dollars and let the local retailer go out of business.

I am often amazed, when I sit down to think about it, how much of the
problems we are currently experiencing boil down to the Pogo Principle..
We have met the enemy and he is us. This is only one illustration.

--
People thought cybersex was a safe alternative,
until patients started presenting with sexually
acquired carpal tunnel syndrome.-Howard Berkowitz

[Han]

"HeyBub" wrote in
m:

China vs. U.S. In my view, this is not a zero-sum game. From our side,
we get cheaper products than the domestic variety. From China's side,
they get revenue that they can use to buy something created in the
U.S.

There is NO ideological difference between choosing to buy from China
and choosing to buy from a guy in the next town. It's called
competition.

Generally I agree. But China is 1 big monopoly in that it regulates its
exchange rate. Of course we are in a sense the beneficiaries, since the
excess dollars they falsely "earn" by keeping their currency undervalued,
are used to buy our debt. Thus, to get rid of our debt, and punish the
Vhinese, we might be best off with some inflation, not too much, something
like 5%/year.

Just a thought.

--
Best regards
Han
email address is invalid

[Ed Pawlowski]

wrote
What makes you think the local retailer is offering wages
that are much different from Walmart? As for the products
the local retailers stores are as chocked full of products
from China as are Walmart.


Where did I say that? I didn't. Local retailers often charge a tad more
than a big discount store. They often handle brands not in the big stores
(regardless of country of origin). They also offer service, and customer
care that big retailers can't. But people will forgo that to save a few
bucks.

When I bought a new washing machine (made in USA), I paid $50 more at a
local store rather than Home Depot. I also felt the extra care with
delivery and so forth made it a good choice. When I bought my Weber Summit
grill (made in USA), the difference was $400 compared to an internet seller,
so the local guy lost out. For the same 50 bucks, he would have been my
choice.

But the majority of people are looking to save a few pennies, no matter what
the cost.