It's time for corporate profits to return to the '90s so companies can make up for decades of underpaying workers, Morgan Stanley says
We are so sorry! We bumped into a system failure and couldn’t take your email this time.Morgan Stanley says it's time for corporations to roll back their profit margins to where they were about thirty years ago — all in the name of worker power.
To make up for underpaying workers, Morgan Stanley says corporations should dial back their own profits for the next five years to retroactively fill the gap. After all, the other option to make up for the higher wages being demanded by workers is to raise prices. Those profits, researchers write, should resemble their 1990s level.
The team, led by chief US economist Ellen Zentner, argues that reducing the gap between profits and worker pay can serve as a"buffer" against higher wages driving prices higher. In turn, trading profits for higher wages would help minimize inflation while reaching the Federal Reserve's"maximum employment" goal, the team said.The chasm between compensation and productivity is a relatively new one, Morgan Stanley added.
The gap between company profits and worker compensation in the past two decades is unprecedented and threatens the structure of the economy, the bank said.
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