Friday, March 31, 2006

Corporate Profits Rise Over 14%

Headline in this morning's Wall Street Journal: "Corporate Pretax Profits Jump 14.4%". Ostensibly, higher corporate profits may seem like a much needed injection into the failing U.S. economy, but this isn't a reality. These gains are not an indicator of innovation by U.S. business, but rather, as the Financial Times calls it, a product of struggling labor unions. Weaker labor unions mean lower wages and fewer benefits, which translates into higher profit margins for executives.

The WSJ article does predict that unions will begin to regain strength in the next few months, and when they do, they must demand that workers' pay rises at the same rate as corporate profits.