Chart of the Day: Corporate Profits Under Threat From Skyrocketing Wages

Yesterday in the Wall Street Journal:

Rising wages are beginning to eat into the profits of some U.S. companies. Businesses from dollar stores to hotel operators to fast-food chains have warned in recent months that higher labor costs have been a drag on their profits—a potential headwind for the nine-year stock-market rally as it struggles for momentum ahead of the second-quarter earnings season.

Today in the Wall Street Journal:

Corporate earnings are poised to extend a run of double-digit growth in the second quarter, providing a balm for a stock market that has languished as investors have grappled with threats ranging from fractious trade relations to tightening monetary policy. Analysts expect earnings from S&P 500 companies to grow 20% in the second quarter from the year-earlier period, according to FactSet

And just for the record, here is wage growth over the past few years:

The markers show inflation-adjusted hourly wages in May 2017 and May 2018. As you can see, wages have skyrocketed over the past year. Clearly something must be done about this grave threat to corporate America’s 20 percent profit growth.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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