Silicon Valley Insider had an interesting article that showed two key statistics for U.S. corporates:
- Corporate profit margins are at an all time high
- Wages as a percentage of the economy are at an all time low
These two factors are explained in part by the significant improvement in productivity over the last 20+ years, in large part due to the wide ranging benefits of IT adoption, as shown in the chart below.
Image credit: Teachmefinance.com
As productivity improves through the use of IT, workers are eliminated or reduced. With more workers chasing a shrinking number of jobs, salaries offered can be lowered which also benefits profit margins.
However, as SVI points out, passing all the benefits of increased profitability on to shareholders (and senior management) does little to motivate workers. Workers with a lower standard of living are not going to remain productive at historic levels.