Bulging Profits in U.S. Often Originate Overseas

This explains why companies are rushing to outsource everything. These statistics would also explain why the wages of the average workers have not gone up in decades. The "profits of companies operating in the United States — whether American or foreign — have risen at an average annual rate of 7 percent in the current decade." But the profits of "American companies from their overseas operations have been growing at a much faster pace of 13.7 percent in the current decade, nearly twice the rate in this country." More and more of the profits come from abroad, where labor is cheap and unions are weak:

Another chart shows the percentage of profits of companies based in the United States that came from other countries. In the 1960s, when the American economy was much less open to the world, about 7 percent of profits came from overseas. By this year’s first quarter, that share was up to 29 percent.

And how much of those profits go to workers--not much:

The share going to workers — based on figures that include neither benefits nor the employer’s Social Security contributions — hit a 10-year low of 34.2 percent in the second quarter of last year, but has since edged back above 35 percent in the first two quarters of this year. Business seems to have weakened, but so far few companies have cut back on employment.

And where do those profits go:

The figures that have really soared to unprecedented heights are the ones that may be most important to investors — the cash sent out to them by companies. The government reports that in the first quarter of 2007, dividends and share buybacks equaled 5.1 percent of G.D.P., twice the proportion during the late 1980s.