Federal data released Wednesday shows US corporate profits jumped 25% to record highs in 2021 even as the coronavirus pandemic wreaked havoc on the national economy, disrupting supply chainshammering low-wage workersand help push inflation to levels not seen in decades.
“Megacorporations cash in and get richer, and consumers pay the price.”
According According to the Commerce Department’s Bureau of Economic Analysis (BEA), domestic corporate profits adjusted for inventory valuation and capital consumption reached $2.8 trillion last year, up from $2.2 trillion. billion in 2020, the largest increase since 1976.
Employee compensation has also increased in 2021, but not at the pace of corporate profits. Quoting new data from the BEA, Bloomberg reported that “compensation for employees has increased by 11%, but the so-called labor share of national income – essentially, the part that is paid in the form of wages and salaries – has fallen back to pre-pandemic levels”.
“It tends to undermine the argument that soaring labor costs are driving the current spike in inflation, a case the Federal Reserve is starting to make as it accelerates interest rate hikes, Bloomberg Noted.
Lindsay Owens, Executive Director of Groundwork Collaborative, argued in a statement that new earnings numbers show that U.S. businesses are successfully resisting inflationary pressures across the economy by charging consumers with higher costs — a tactic some CEOs have openly touted for recent calls with investors.
“CEOs can’t help but brag about corporate earnings calls for higher prices for consumers to keep profits up – and today’s annual earnings data shows just how their inflation strategy is working,” Owens said. “These megacorporations are cashing in and getting richer, and consumers are paying the price.”
The American Economic Liberties Project expressed a similar view on Twitter:
A number of large US corporations, Amazon at Starbucks at the Dollar Tree, have announced in recent months that they are preparing to raise prices for consumers, often blaming the wider “inflationary environment”. Outgoing Starbucks CEO Kevin Johnson, who saw his compensation soar 39% to $20.4 million in 2021, said on his company’s fourth-quarter earnings call that the impending price hikes aim to alleviate “cost pressures, including inflation”.
“Pathetically, big business is using the war in Ukraine and the pandemic as an excuse to raise prices.
But recent survey data indicates that Americans do not accept corporate justifications for higher costs. A Data for Progress poll released last month found that a majority of U.S. voters think “big business is taking advantage of the pandemic to raise prices unfairly to consumers and boost profits,” a stance also taken by progressive members of Congress.
Next week, Senate Budget Committee Chairman Bernie Sanders (I-Vt.) plans to hold a audience titled “Corporate Profits Soar as Prices Rise: Are Corporate Greed and Profit Fueling Inflation?”
During a separate hearing Wednesday on President Joe Biden’s latest budget proposal, Sanders said that “to a large extent, pathetically, big business is using the war in Ukraine and the pandemic as an excuse to dramatically increase prices in order to make record profits”.
“It’s happening at the gas pump, at the grocery store, and pretty much every other sector of the economy,” the Vermont senator said. “That’s why we need a windfall tax, and why this committee is holding a hearing Tuesday of next week on the unprecedented level of corporate greed taking place in America today.”