We often hear about creating wealth before distributing it. This wealth is now created, but in Canada, a larger share is going to profits than to salaries
"Corporate profits are reaching historic heights, while employee salaries are at their lowest levels with respect to the size of the economy," wrote journalist Éric Desrosiers in an August 29, 2006, Le Devoir article.
At the beginning of the 1960s, salaries and benefits accounted for 50% of Canada's gross domestic product (GDP). This proportion rose to 56% in the mid-1970s, but has since decreased, to lower than the 50% mark in 2005.
Profits, for their part, follow economic cycles. According to Desrosiers, "They represented the equivalent of 14% of Canadian GDP in 2005—as much as, if not a little more, than the previous record set in 1973."
The trend is even more obvious in the U.S. "With the economy beginning to slow, the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers," reported the August 28 New York Times
The article mentioned that salaries have never accounted for as low a share of U.S. GDP since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960s.
Globalization, the weakening of unions, lay-offs and the introduction of new technology account for this phenomenon, by eating away at employees' bargaining power.
Not everyone is equally affected, however, by this downward trend—corporate executives and specialized workers in high-flying sectors are spared.
Source: Éric Desrosiers, "À qui profite la croissance économique", Le Devoir, August 29, 2006