Dean Baker: As Profit Shares Hit New Highs, Washington Focuses on Abuse of Disability System

Monday, 01 April 2013 11:52  
By Dean Baker, Truthout | News Analysis 

The Commerce Department released data on corporate profits last week that showed the before-tax profit share in 2012 reaching its highest level since 1951. The after-tax profit share edged down by one-tenth of a percentage point from its 2011 level, but was still higher than every other year since 1930. Naturally this new information led the Very Serious People (VSP) in Washington to focus on the problems of abuses of the Social Security disability system.

If soaring profits and rising disability rates seem unrelated, then you better look closer. The most obvious reason that profit shares are soaring is that high unemployment takes away workers' bargaining power. As a result of the collapse of the housing bubble, the economy is still down almost 9 million jobs from its trend growth path.