Home
/
RELIGION & LIBERTY ONLINE
/
What if we redistributed all profits to workers?
What if we redistributed all profits to workers?
Apr 4, 2025 12:33 PM

A plaint by the political left is that the CEOs of panies earn too much money. The implication is not, however, that the “excess” money should be distributed to the shareholders (who actually own pany). Instead, the ideais that “fairness” requires that much of theprofitthat normally goes toward the CEO’s pay should be redistributed to the rest of pany’s employees.

But what if we took it a step further: What if we redistributed all corporate profits to workers? What if the profits of every pany were not given to the shareholders but divided equally among every worker in America?How much do you think it would raise the average worker’s pay?

Take a moment to do a rough guestimation of how much the hourly wage would be raised if all profits were redistributed. Have a number in mind?

The answer to the question is that the average worker’s hourly wage would increase by . . .

. . . $7 an hour.

Kevin A. Hassett crunched the numbers e up with that figure:

To answer this question, we gathered data on after-tax corporate profits from the Bureau of Economic Analysis. We then gathered data on average hours worked per week per nonfarm employee from the Bureau of Labor Statistics and transformed these weekly data into data on the aggregate number of yearly hours worked by all nonfarm employees. Finally, we divided quarterly corporate profits by the aggregate number of hours worked by nonfarm employees over the same period, labeling this value the “expropriation subsidy” on the chart. To get an idea of how much of a per hour wage increase this policy could create, simply add the values of the two lines at a point in time.

As the chart shows, if every dollar of U.S. corporate profits were allocated to America’s employees, the effect would be to add a bit more than $7 to the average wage.

For most of us, $7 an hour would be a e raise. But it also wouldn’t be life-changing. The average hourly wage for non-government workers is currently $25. Bumping it to $32 would have a small effect on our lifestyles, and almost no affect at all on the overall economy.

Most people with a basic understanding of economics realize that making a profit is a necessary incentive to encourage people to take the risks and endure the hassles e with starting and running a business. If you work at a pany, think what would happen if the business you work for stopped earning a profit. You probably realize that it’d be better to forego a $7 bump in pay if it meant getting to have and keep a job your job.

Yet most economically literate people who wouldn’t risk their own jobs over a $7 increase in pay are more than willing to risk the elimination of someone else’s job for that same amount. That is essentially what is happening in thedebate about raising the minimum wage to $15 an hour.

The current federal minimum wage is $7.25 an hour. If we added $7 more we’d get a wage of $14.25. The “Fight for $15” campaign would increase it an additional .75 cents.

So where do employers get the additional $7.75 increase to pay their workers? From their profits. The problem, of course, is that many firms that hire minimum wage workers don’t have sufficient profits to pay an increase of $7 an hour.

Keep in mind the $7 we mentioned earlier was from all private industries. Many of the most profitable firms are the ones that do not hire many minimum wage workers. Of the 20 most panies in the world, nine are based in the United States. These include two banks, Wells Fargo and JPMorgan Chase; two panies, Exxon Mobil and Chevron; two technology firms, Apple and Microsoft; and the conglomerate Berkshire Hathaway.

You don’t see many minimum wage bank tellers or gas station attendants in America. The reason is because those industries found ways to automate (e.g., ATMs and pay-at-pump machines) to eliminate their low-skilled labor costs. So the industries that often make less profit than the average are the ones that are expected to bear the brunt of the cost ofsubsidizing the increase in minimum wages.

While it may feel that raising the minimum wage is the right thing to do, it doesn’t help those who are put out of a job because they are priced out of the labor market. If you wouldn’t want to lose your own job so that someone else could make an additional $7 an hour, then you shouldn’t be eager to do the same to America’s least-skilled workers.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Questions about the Red Cross
The Remedy, the Claremont Institute‘s blog, links to an article in the Los Angeles Times by Richard M. Walden, head of Operation USA, that raises concerns about how the Red Cross spends the money it receives for specific disasters. Walden levels some important and serious charges against the Red Cross, and may or may not be convincing depending on if you approve of the Red Cross’ fund-raising precedents and other activities. But Walden is undeniably right is when he raises...
The nose of a camel: The federal government and education
Federal involvement in education has grown steadily throughout the nation’s history, encroaching on what is still viewed by American’s as mostly a state and local responsibility. Kevin Schmiesing looks at a new book that examines U.S. education policy, the red tape and bureaucracy that has resulted, and the opposition to federal control that arose from parochial school administrators. Read the full text here. ...
Submerged subsidiarity
Because too much has already been said about the recent gulf hurricanes, I won’t put in my two cents. I will, however, direct the reader to the most insightful take on this situation that I have yet to stumble across. As you read it, think again about the importance of the definitions of the words we use, such as ‘responsibility’ and ‘authority’ as are discussed in the mentioned article. ...
Hurricane relief – Small organizations to the rescue
In the wake of overwhelming need of Hurricanes Katrina and Rita, thankfully a number of us are voicing irritation with the inquiry, “How important do you think that faith-based organizations are to helping people”? Before ANY organization — government agency of any kind or national nonprofit — made a move, faith organizations had already moved. In San Antonio, where several Russian students were among New Orleans evacuees, Victory Fellowship, a faith-based, privately funded substance abuse treatment program, simply did the...
Breathing with one lung?
Bishop Hilarion (Alfeyev) of Vienna and Austria, the Russian Orthodox Church’s representative to the European Union, is once again urging a Roman Catholic-Orthodox alliance bat secularism, liberalism and relativism in Europe — and lands outside it. “The social and ethical teachings of the Catholic and Orthodox Churches are extremely close, in many cases practically identical,” Bishop Hilarion said. “Why, then, should we not be able to reveal our unity on all these major issues urbi et orbi?” Since the election...
Journalism professor calls for Helter Skelter
In 1969 Charles Manson and his gang set out to ignite a race war that pitted the wealthy white establishment against underprivileged blacks. The apocalyptic battle would be called “Helter Skelter,” after the Beatles’ song written by Paul McCartney. The white Manson reasoned that America’s angry black population would eventually win this war; at which time he and his group would emerge from their Mojave Desert hideout to assume leadership over what he perceived to be an inferior race. es...
The right pass at the right time
If you haven’t heard of this story yet, read about what Notre Dame head football coach Charlie Weis did this past weekend. His expression passion for a dying boy, 10-year-old Montana Mazurkiewicz, transcends sports. Weis honored a promise to Montana despite the fact that he is a first-year coach in the big business of college football, in what might be the most scrutinized and storied programs in the country. In a personal visit to the boy last week, in addition...
Spendthrift republicans
A wonderful piece by Deroy Murdock today on NRO. Though most fiscal conservatives understandably vote Republican, the record substantiates the theory that spending is less responsible when Congress is dominated by one party—either party—than when each party has enough votes to frustrate the other. Others have drawn attention to the problem of Republican pork, but Murdock does so in an especially devastating way. ...
CAFTA, prudence, and volleyball
After receiving some responses to a previous post (CAFTA/Culture of Life: Enemies?), I thought I would post the the exchange with my most recent dissatisfied critic. Here’s to volleying! (I have edited the emails for confidentiality.) Mr. Phelps, It was with great interest that I recently read your blog entry “CAFTA/Culture of Life: Enemies?” as for some strange reason it recently appeared on the Google Alerts. I found it amusing how you worked John Paul’s teachings in without actually quoting...
Fab labbing, Fu-Fu, and the ovine entrepreneur
The BBC reports today a great illustration of human creativity and the intersection of technology and subsidiarity. MIT has set up what they called Fab Labs (Fabrication Labs) in what many might consider the least likely places for technological invention. These Labs consist of basic tools and software than enable people in sometimes remote and rural locations to invent and fabricate the technology they need in their daily work. MIT professor Neil Gershenfeld: In a world of Fab Labs, you...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved