In this story about non-compete clauses for low wage jobs, the New York Times reported, "American businesses are paying out a historically low proportion of their income in the form of wages and salaries."

Is this true?

  • 3
    While not an answer, the NY Times also published a related article about 6 months ago. It compares both corporate profit and employee compensation against GDP, but in essence it says the same: businesses are making more while paying less. – Is Begot Oct 14 '14 at 21:24
  • @Geobits ah that's interesting. I wish they had linked that from the article I was reading. – RationalGeek Oct 15 '14 at 11:56
  • I think this is slightly misworded. income is a measure of money coming in (profit/loss ledger), while salary/wages are expenses going out. Wouldn't it make more sense to compare wages/salary to total expenses? For example, if a business's income remained flat, but non-wage costs increased (materials), you could get historically low wages as a percentage. Or if their wages stay flat or even increase, but companies are making record incomes you could get the same result. – user1873 Oct 18 '14 at 1:40
  • I agree with @user1873 that "income vs. wages" (while echoing the text of the claim) is flawed. But in general, the broader point (profit rate increases vs. wage stagnation) seems so well established I wonder if I'm missing a subtle point about which you're skeptical? (Google "business profit versus wage graph") – Larry OBrien Oct 18 '14 at 13:44
  • @LarryOBrien, I can see that as a possibility, but does that mean they are measuring business profits before (taxes, depreciation, capital expenditures) versus wages. Or after those expenses. – user1873 Oct 18 '14 at 14:05

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