How Is This Economic Recovery Unlike the Rest?

Photo: Saad.Akhtar

A recent study by a team of economists at Northeastern University’s Center for Labor Market Studies argues that the current economic recovery is the worst since World War II for worker pay and job growth — but the best for corporate profits. The headline:

Over this six-quarter period [from Q2 of 2009 to Q4 of 2010], corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income.

That’s right. Of the $528 billion in real national income gained between the second quarter of 2009 and the fourth quarter of 2010, pre-tax corporate profits accounted for $464 billion, while wages rose by just $7 billion. If you extend that out to the first quarter of 2011:

[C]orporate profits accounted for 92% of the growth in real national income while aggregate wages and salaries declined by $22 billion and contributed nothing to growth.

Wowsers. Here’s how those percentages compare to previous recoveries measured by the first six quarters of economic growth (Roman numerals designating the quarters):

• 1975 I – 1976 II
  Corporate Profits Share of Growth in National Income: 32%
  Aggregate Wage and Salary Share of Growth in National Income: 38%

• 1982 IV – 1984 II
  Corporate Profits Share of Growth in National Income: 28%
  Aggregate Wage and Salary Share of Growth in National Income: 25%

• 1991 I – 1992 III
  Corporate Profits Share of Growth in National Income: -1%
  Aggregate Wage and Salary Share of Growth in National Income: 50%

• 2001 IV – 2003 II
  Corporate Profits Share of Growth in National Income: 53%
  Aggregate Wage and Salary Share of Growth in National Income: 15%

HT: Roya Wolverson