GARY SHILLING: Pay People More? Henry, You're A Marxist!
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One of the big problems in the U.S. economy right now is that big corporations are generating record profits not by growing revenues but by cutting costs.
"Costs," as everyone who works for a big corporation knows, are a synonym for employees, employee wages, employee perks, capital investment, and research and development.
As a result, we have reached a point where corporate profit margins are at all-time highs and corporate wages are at all-time lows as a percent of the economy. (See charts here.)
That's not sustainable, says economist Gary Shilling of A. Gary Shilling & Co. (Aaron Task and I interviewed Gary for Yahoo! Daily Ticker yesterday. You can watch the video here or below.)
The employees whose collective wages are stagnant or dropping account for most of the spending that drives the economy. So if employees aren't getting paid well, and corporations aren't spending, the economy can't grow quickly.
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