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Worker comp is down. Corporate profits are up. Imagine that.

As long as we're collecting up all the spending and income statistics this morning, here is the newly released Employment Cost Index from the BLS:

This is an important number because it tells us how much employers spend on workers. Obviously wages and salaries are the main component, but it also includes other expenses like bonuses, the employer share of Medicare and Social Security taxes, health care, office space, company cars, time off, retirement contributions, uniforms, and any other expenses a company might have that's related to worker compensation.

For some reason ECI is reported as an index rather than an average dollar amount, but it represents dollars and can be adjusted for inflation just like any other dollar outlay. That's what I've done here, and as you can see the results continue to be startling. Despite all the whining and moaning, total average comp for workers is less today than it was five years ago.

As with so many other compensation numbers, what this tells us is that although employers might complain about a shortage of workers, they're obviously not doing much of anything to attract them even though they could:

Real ECI is down 1.5% since 2017 while real corporate profits are up 18% during the same period. Just to hammer this home, here are corporate profits compared to ECI:

This is not a percentage or anything like that, but it is a ratio of profits to compensation. I call it the Greed Index, and it's gotten worse and worse: up from 14 to 16.5 over the past five years. That's a fairly astonishing 19% increase. But perhaps not a surprising one.

POSTSCRIPT: There are exceptions to this since ECI and profits vary from industry to industry. For example, in the always whining restaurant and accommodations industry, real ECI is up 10% over the past five years. That's better than going down! Of course, after-tax industry profits are up a remarkable 55%, so that 10% raise isn't all that impressive. That's an increase in the Greed Index of 42%. Booyah!

5 thoughts on “Worker comp is down. Corporate profits are up. Imagine that.

  1. Gilgit

    I'd point out that Kevin has downplayed the idea promoted by many that corporations were a big part of the current bout of inflation. I've always thought it was a much bigger part of the problem than Kevin give it credit.

    1. seymourbeardsmore

      Exactly. I don't understand why anyone would expect corporations to just voluntarily lower their prices as long as people are paying them.

  2. Justin

    I don't think this is quite fair... I work in a manufacturing plant and this came out as a warning to use this week.

    "A 25-year-old New Haven woman has been killed in a forklift crash at a Sterling Heights auto supplier plant, according to police. The body of the woman, whose name has not been released, was at the Macomb County Medical Examiner’s Office, awaiting an autopsy Monday afternoon, according to staff there. The woman was driving a forklift at the Metalsa plant at 40117 Mitchell Drive when the machine turned on its side and on top of her, according to an email from Sterling Heights Police Lt. Mario Bastianelli. She was pronounced dead at the scene of the crash, which happened about 12 a.m."

    This really isn't necessarily a management problem. Turned the lift driving too fast around a corner. This was the communication to our plant. I don't work at Metalsa.

    1. marcel proust

      Yeah... Based on the title of the post, I also thought this was about Workers' Compensation, not the employment cost index

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