The CBO now estimates that the economy will grow even slower than it expected in its previous economic outlook. Not only that, it now expects that wages and salaries will comprise a smaller portion of that reduced economic pie. The report suggests that troubling long-term trends in our economy are getting worse. Middle-class wages have been stagnant for over a decade. Steven Greenhouse notes in the New York Times that “overall employee compensation — including health and retirement benefits — has also slipped badly, falling to its lowest share of national income in more than 50 years while corporate profits have climbed to their highest share over that time.”
At the same time, the CBO increased its estimate for corporate profits. Workers’ low wages are good news for corporations: the CBO explains that “lower labor costs are expected to reduce businesses’ expenses,” which means higher profits.
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