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Wages Are Down, But Are Corporate Earnings Up? A Case Study

November 19, 2014 3:31 pm
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The graph below was produced by Capital Market Labs.

While corporate profits in the S&P 500 are ringing in all-time highs, nominal wages are relatively stagnant since the peaks in 2007, which means real wages are down.

In English, this appears to mean one thing: Corporations are getting richer as workers are becoming poorer. The chasm between the two is near an all-time high in the modern era.

One company is not to blame, though.

In fact, 500 companies are probably not to blame either, but sometimes, one chart for one company paints a thousand words.

Let's look at Verizon Communications Inc. (NYSE: VZ), and plot revenue per number of employees in the blue bars and number of employees over total assets on the red line.


On the graph, one can see that the blue bars are rising, which means revenue is increasing faster than employee headcount at a rather staggering rate.

Also, it can be seen that the red line is dropping, which means the number of employees is falling faster than asset growth (also at a rather staggering rate).

Ophir Gottlieb can be found on Twitter @ophirgottlieb.

Image credit: Robert Scoble, Flickr


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