Re: surge in U.S. corporate profits

[Allin Cottrell <cottrell@xxxxxxx>]

On Wed, 19 May 2004, Paul Zarembka wrote:

> I haven't analyzed it but the consumer price index went up 14.4% from
> 9/1997 to 12/2003 (http://data.bls.gov/cgi-bin/surveymost) and
> employment increased 6.3%
> (ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt).  Are you wanting
> attribute the balance to an increase in s/v?

Good answer.  I hadn't looked up those other statistics, though I
should have.  We have (roughly)

profit = (surplus labor per worker) * (number of workers employed)
  * (monetary counterpart of an hour of labor)

The last term is sometimes called the "MELT", which in turn can be
decomposed as:

MELT = ($/good) * (goods/worker-hour)
     =~ CPI * (productivity of labor)

As you say, the % change in employment =~ 6% since the last profit
peak and the % change in CPI =~ 14%.  According to other BLS figures,
the increase in output per hour in the Business Sector has been > 20%
since 1997 (with the biggest increases over the last 2 years).  That
comes fairly close to accounting for a 50% increase in profits.

Allin Cottrell