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Notes From the Fieldby Martin Weil

July 1, 2011

Recovery for capital, but not for labor

Economists at Northeastern University have found that the current economic recovery in the United States has been unusually skewed in favor of corporate profits and against increased wages for workers. …

According to the study, between the second quarter of 2009, when the recovery began, and the fourth quarter of 2010, national income rose by $528 billion, with $464 billion of that growth going to pretax corporate profits, while just $7 billion went to aggregate wages and salaries, after accounting for inflation.

A principal reason this economic recovery has been so anemic compared to prior recoveries has been a lack of end demand.  A lack of employment causes a lack of demand, which in turn causes a lack of new employment to meet that demand.  The employment situation thus remains stuck in a vicious circle that has yet to be broken.

Quote from the NY Times Economix blog

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