The New York Times reported this week that corporate profits are at their highest point in recent history, while the portion of that profit that goes to employees is near its lowest point.
Meanwhile, a recent nationwide public opinion poll by the non-profit National Institute on Retirement Security (NIRS) has found that an overwhelming majority of Americans (85 percent) are concerned about their retirement prospects, with more than half (55 percent) saying they are very concerned. Concern was higher for women than men (90 and 80 percent, respectively).
According to the Bureau of Justice Statistics, only 18 percent of private industry employees were covered by defined benefit plans (pensions) in 2011; compared to 35 percent in the early 1990s. Only ten percent of private industry establishments offered a defined benefit pension plan to their employees in 2011. More than 80 percent of employees who are offered traditional pensions work for unions or the state or local government.
The NIRS study found that 82 percent of Americans believe that workers with pensions are more likely to have a secure retirement than workers who depend upon 401(k) plans and the volatile stock market.
The NIRS study found overwhelming support (90 percent) across generational lines for a new type of pension plan that is available to all Americans, is portable from job to job, and provides a monthly check throughout retirement for those who contribute.
Americans do not appear to be optimistic that policymakers will act in response to their retirement concern. The NIRS study found that 87 percent of Americans do not believe the country’s policymakers understand how hard it is to save for retirement.
Note: The Center for Responsive Politics estimated the median net worth of a U.S. senator stood at an average of $2.63 million in 2010. The median estimated net worth of a GOP House member was $834,250 in 2010, compared to a median net worth of $635,500 among House Democrats.
The New York Times reported that corporate profits, as a percentage of national income, stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966.
Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, the Times reports, while dispoable income inched ahead by 1.4 percent annually over the same period, adjusting for inflation. “There hasn’t been a period in the last 50 years where these trends have been so pronounced,” said Dean Maki, chief United States economist at Barclays.
