Big Taxes Not Big Business
Behind Paycheck Woes
by


This first appeared in the
North Hills News Record

According to Fortune magazine's latest "1996 Fortune 500," General Motors tops the list with almost $169 billion in revenue. Ford comes in number two with revenue of more than $137 billion.

Wow! What do you know? The top two companies in America are manufacturers--car manufacturers at that!

But considering today's political climate, the Fortune 500 isn't exactly something to celebrate. A lot of people see it as a twisted tribute to immoral corporations that rack up record profits at the expense of their employees.

But has the corporate climate changed for the worst? Are corporations more greedy today?

Last year, despite billions of dollars in revenue, General Motors earned only 4.1 cents on the dollar in profits. Ford's share was just three cents. No one can say these are outrageous profits. Sure, some companies raked in mega-bucks, but the big picture looks a lot different.

In the last few years, corporate profits have grown at a healthy clip, but that's only because the previous few years were so lousy. On average, after-tax profits in the 1990's have tumbled to 6 percent of a company's revenue. That's down from 8 percent in the 1970's, 9 percent in the 1960's and more than 10 percent in the 1950's. And forty years ago, no one griped about how much money a company made.

But companies are still short-changing their employees, right? Actually, no. The Commerce Department numbers show that companies are paying out a larger percentage of revenue to their employees in wages and fringe benefits.

Why does the myth of corporate greed continue to run rampant in the mainstream media? Why do employees feel short-changed?

Unfortunately, when people whine about their paychecks, most only look at their take-home pay. They don't consider how much of their compensation pays for benefits or how much is siphoned off in taxes.

In forty years, benefits have jumped from 4.4 percent to 11.5 percent of corporate revenue. Social Security and Medicare taxes now claim a bigger chunk of income, and if you're under the age of 45, you're not likely to see any of that money again.

This means that contrary to popular belief, wages haven't stagnated. People are earning more even though they don't necessarily feel richer. But don't blame that on corporate America.

© Copyright Deborah A. Ayers 1996. All rights reserved.