As the death toll from the pandemic continued to rise, U.S. companies enjoyed the largest profit margins for more than 70 years in the second and third quarters of 2021.
US corporate profits before adjustments hit a record high of $ 3.14 trillion at a seasonally adjusted annual rate in the third quarter of 2021. After taxes and adjustments for inventories, profits hit a record high of 2 , $ 74 trillion, according to the most recent figures released by the US Department of Commerce.
These figures, released as the official death toll from a pandemic in the United States approaches 800,000, are a direct product of the government’s focus on profits over human lives. This was highlighted again on Monday when President Biden said no public health measures would be taken aside from vaccines in the face of the spread of the Omicron variant, despite warnings from scientists that it could be vaccine resistant.
Fueled largely by the government’s massive injections of liquidity into the economy, profits of domestic non-financial corporations increased by $ 67.5 billion in the third quarter and $ 221.3 billion in the second quarter of 2021. Compared to the last quarter of 2019, the last report period before the start of the global pandemic, profits were up 39.6%. In dollar terms, the annual increase in profits since before the pandemic began has exceeded $ 500 billion, based on figures from the U.S. Department of Commerce.
Profit margins, the share of profits on every dollar sold, were at their highest level since 1950, at the start of the post-war economic boom. Almost two-thirds of US-listed companies reported higher profit margins this year compared to 2020. One hundred of the largest recorded profit margins at least 50% above last year’s levels.
The spread of COVID-19 has been used by the ruling class to effect another vast transfer of wealth from the working class to the coffers of corporations and the very rich. Pandemic financial assistance has gone disproportionately to the wealthy as the US Federal Reserve has poured trillions into financial markets while keeping interest rates near zero.
Amid the surge in profits, according to figures released by the United States Bureau of Labor Statistics earlier this month, real average hourly earnings for all employees fell 0.5% from September to October 2021. With inflation increasing at the fastest pace since 1990, year-on-year real wages fell 1.2%, seasonally adjusted, from October 2020 to October 2021. Combined with a 0.3% decrease in the average work week, there was a 1.6% drop in actual weekly earnings.
While inflation had the effect of reducing the real wages of workers, most companies were able to pass higher prices on to consumers. Large retailers such as Walmart, Home Depot and Target posted higher profits in the third quarter, despite supply chain issues and labor shortages. Walmart shares rose 25% for the year and Target’s by 47%.
Procter and Gamble, a provider of home and personal care products, reported a whopping 24.7% profit margin for the third quarter, with net income of $ 14.3 billion for fiscal 2021. In April, the company announced significant price increases for its product line. Rather than giving consumers a price cut, P&G decided to reward investors by buying back some $ 3 billion of its own shares.
Among the big winners were oil companies, whose profits rebounded after falling last year amid rising oil prices. ExxonMobil posted net profit of $ 6.8 billion in the third quarter of 2021 while Chevron, the second-largest U.S. oil company, reported adjusted profit of $ 5.7 billion, its best in eight years and 17 times higher than its profits a year ago.
The glaring contradiction between soaring profits and the precarious circumstances in which millions live, facing the danger of infection as soaring inflation erodes incomes, is fueling a wave of working class activism. On the side of the ruling class, the increase in strikes has raised fears that workers will break free from the grip of the corporate unions after decades in which the class struggle has been suppressed. There is fear that workers are seeking significant wage increases, undermining the financial house of cards that has been created by the continued injection of cheap money into financial markets.
This has already been the case at many companies, including the US farm and heavy equipment company John Deere, hit by a bitter five-week strike by members of the United Auto Workers. However, rather than demand that Deere divert profit money to restore previous concessions imposed on workers, the UAW imposed a rotten contract, well below workers’ demands and ending the strike of 10,000 workers. from Deere. The UAW used threats and lies to get the contract ratified, incorrectly claiming the company had no money to provide adequate wage increases, including the reinstatement of decades of concessions.
This despite the fact that the company reported a net profit of $ 6 billion for the fiscal year ending Oct. 31, more than double the total of $ 2.8 billion from the previous year. The company’s previous record was $ 3.5 billion in 2013. Deere expects net income of $ 6.5 to $ 7 billion for the current fiscal year.
Cereal maker Kellogg is threatening to hire permanent replacements for 1,400 strikers at five factories in the United States. The company reported operating income of $ 447 million in the third quarter of 2021, up 9.1% from the same period last year. However, management has refused to respond to workers’ demands for the elimination of the hated multilevel wage structure that leaves 30 percent of the workforce at a “transition level” with lower wages and benefits. , as well as a grueling salary of 7 days and up to 16 hour working hours.
The windfall profits of American companies in the midst of the worst health disaster in 100 years are due to the policies of a criminal ruling class that has constantly prioritized profits over human lives. There is no death level that will force the government to change course, as politics is entirely subordinated to the profit interests of the rich.
This has been the case since the start of the pandemic, when the ruling class decided to cover up the dangers posed to the population by the emergence of the SARS-CoV-2 virus in order to support financial markets and prevent a collapse of markets. stock markets.
The working class must step in to demand that the vast resources now flowing into the coffers of big business be instead used to fight the global pandemic. The powerful scientific resources of society must be used to eliminate and eradicate the virus, saving the lives of millions of people.
the World Socialist Website and the International Committee of the Fourth International launched the global workers’ investigation into the COVID-19 pandemic to uncover the truth about the response to COVID-19. A critical aspect of this is the exposure of how financial interests have dictated government policy, prioritizing each step for profit over human lives.