Why have wages not risen in the US? “Peak Profit Margins? A Global Perspective”

The “research paper is prepared by and is the property of Bridgewater Associates, LP.” It’s worth the read. Here are highlights, as I see them:

When we expand the margin analysis globally, we see that many of the forces that supported US profit margins over the past two decades have similarly buoyed profit margins across most other developed economies. Corporations around the world simultaneously benefited from the broad-based decline in labor’s bargaining power, increased globalization, lower anti-trust enforcement, technology allowing for greater scale and lower marginal costs, and lower corporate taxes, interest rates, and tariffs. These factors have produced the most pro-corporate environment in history globally, with the US [corporations, executives, shareholders, not workers] benefiting the most. …

The biggest force behind the global profit margin expansion has been the decline in the labor share of output. A key factor that has contributed to this reduction in labor’s bargaining power versus capital is the decline of organized labor and unions. This phenomenon has occurred over decades for an array of reasons that are intertwined with the other forces acting on margins—like access to pools of cheaper foreign labor and advancing automation technology.

A big force driving this phenomenon was the massive pool of cheap labor coming online in China, which depressed labor wages across the developed world ….

… this accelerated after 2001, when China joined the WTO ….
… While some of this was passed on to consumers through lower prices for goods, a big portion was retained by these companies in the form of higher profit margins. …

We have seen popular sentiment begin to sour against the forces that have driven margin expansion, as well as against the companies that have benefited most from them. … we are in the midst of a populist backlash against rising inequality and we are increasingly seeing a move toward more protectionism. Recent surveys show increasing animosity toward globalization and the power of companies more broadly, and a bit more welcoming attitudes toward government regulation of firms.

… it will be hard for companies around the world to maintain the current level of profitability over the coming decade, let alone increase margins further from here. [Source]