Wealth Creation and Wealth Sharing: A Colloquium on Corporate Governance and Investments in Human Capital
Wealth Creation and Wealth Sharing: A Colloquium on Corporate Governance and Investments in Human Capital
Synopsis
Excerpt
Since the mid-1980s, the corporate sector in the United States has been undergoing a fundamental, but still poorly understood, structural change. Corporate profits have been growing rapidly by historic standards, expanding by more than 40 percent in real (inflation-adjusted) terms in the years from 1985 through 1995. The value of stock market equities has grown even faster, with the S&P 500 index, for example, more than doubling in value, in real terms, during the same period.
Although profits at large corporations have risen, their employment has not, and pay for workers has risen less than in previous expansions. In fact, since the mid-1980s, one large corporation after another has announced mass layoffs and downsizing programs. By the mid-1990s the companies that compose the Fortune 500 had nearly 3 million fewer employees than they did in 1985.
To be sure, rising employment at smaller companies more than replaced the jobs eliminated at large corporations. But the new jobs typically paid less. Meanwhile the compen-