Record Profits Boost Corporations While Workers’ Wages Barely Keep Pace With Inflation

Tariff refunds, AI, and the Iran war have helped push corporate profits to a record share of American income, according to new federal data, providing a fresh line of attack for Democrats seeking to cash in on consumer frustration over high prices ahead of November’s mid-term elections.Data released by the government’s Bureau of Economic Analysis show American companies booked pre-tax profits at an annualized rate of $4.8 trillion in the April to June period, accounting for 18 percent of national income, the highest since the period immediately after World War II.The share of income accruing to workers fell during the same three months to 60 percent, its lowest point since the 1950s, according to the Financial Times. The newspaper quotes an economist at JPMorgan, Abiel Reinhart, saying, “Regardless of what measure you look at, workers, in terms of employee compensation, have been receiving an increasingly small share of national income over time.”A share of the corporate bonanza can be attributed to federal government refunds of Trump administration tariffs that were collected before the Supreme Court ruled them illegal in February. The government has so far refunded $100 billion of an estimated $166 billion it is expected to pay back, Forbes reported this month.The news outlet notes that companies including Apple, Nike, GM, and others reported nine-figure refunds during the second quarter but in most cases, the companies are plowing the windfall back into their companies rather than lowering prices or refunding customers.Other factors contributing to the corporate bonanza include huge profits for tech companies attributed to the AI boom and windfall earnings for American oil companies as the Iran war drives up the global price of petroleum products.Second-quarter earnings by companies in the S&P 500 Information Technology sector rose by 70.4 percent over the previous year, making it the “primary driver” behind the overall boost in corporate earnings, according to the Bureau of Economic Analysis. The same BEA report showed that energy sector profits were up by 122.9 percent compared to the same period last year.Wages, meanwhile, remain largely stagnant, slipping by 0.2 percent relative to inflation during the 12 months ended in July, contributing a widespread sense that the country is suffering from an affordability crisis — a feeling endorsed by 95 percent of Americans in a Harris Poll this summer.“The unfairness of how corporate wealth is distributed is off the charts and people want action to change that,” an analyst at the Institute for Policy Studies, Sarah Anderson, told the FT. “I think we could be seeing the beginning of a serious backlash.”Leading Democrats have been making the disparity part of their mid-term push and seeking to link it to accusations of self-dealing, favoritism, and corruption by the Trump administration.“Yes, corruption costs you money,” Senator Elizabeth Warren wrote in an X post on August 27. “Trump gives contracts to donors, not necessarily the best bidder. He gives tariff breaks to countries that give him gifts. He gives billionaires and corporations tax breaks. You pay more. They cash in.”Mr. Trump himself has signaled his sensitivity to the public frustration, voicing his concern to reporters in the Oval Office in early August about the record oil company profits.“They’re making too much money,” he said, while attributing high gas prices to a temporary shortage caused by the war. “I don’t like it and I should be the last one to say it because I’m a big free enterprise guy, nobody bigger.”

Record Profits Boost Corporations While Workers’ Wages Barely Keep Pace With Inflation

Record Profits Boost Corporations While Workers’ Wages Barely Keep Pace With Inflation

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