We need to figure this out, and soon

Corporate profits are at an all-time high, partly because employee wages, as a percent of the economy are at an all-time low. Here’s a graph showing wages as a percentage of the economy from the end of WWII to 2012.*

You don’t need to be a Wharton MBA to understand that graph. Our current system has created a country of a few million overlords and 300+ million serfs.

This is not what has made America a great nation. It is also not what most of us believe America represents.

This is not about politics. This is about economics.

We hear a lot about government debt, but not so much about corporate debt, and personal debt, and the latter two loom just as large as the former. Families have begun tackling their personal debt, and it’s time corporations did the same.

One of the reasons I argue for the break-up of the consolidated radio groups is their debt is so large that they know it cannot be repaid. And so even though their radio stations still throw off excellent free cash flow, it’s not enough to service debt on over-leveraged loans. So, executive management keeps firing lower level employees in order to protect their huge salaries and perks. They are not producing productive capital.

Most U.S corporations need to operate with less debt.

And, they need to hire and pay their employees more so those employees can afford to buy the products they produce. That provides stimulus throughout the economy, but it also provides a measure of dignity and hope of a better future that has been largely absent for the working class for the past 20 years.

It’s absolutely vital that we turn that graph above in the opposite direction, and soon, if we hope to make America’s economy broadly stronger in the coming decades.

Yes, that means corporate profit margins will drop. They can afford to fall quite a long way and still be above average, because as you see in this graph, corporate profits are at an all-time high, even while revenue produced by corporate taxes to federal and state governments is at an all-time low…

And, this is our country we’re talking about. If corporations really are people, it’s time for them to start acting like people, like citizens, and sharing a little bit. Because our infrastructure needs repair, more and more “middle class” workers can’t earn enough at their jobs to afford food without assistance — and that’s just not right.

The most successful radio stations I know pay their employees well, more than the average in their markets. They do so first to keep them, and to show them they value their talent. They also show the market that their company is the pinnacle, unlike the consolidated groups, and that has value too.

Until every American business begins to value the actual work of its workers, and proves it by paying them a wage that allows them to live a life of dignity and hope, I think our country is going to struggle, economically and morally.

Henry Ford, who paid his assembly line workers three times the going rate when he opened his first plant, said he did so because he wanted them to be able to buy the cars they produced. It made him a very wealthy man. And it helped create a new Middle Class of Americans.

Surely, we can find some leaders in today’s corporate America with the same insight.

*All charts taken from Business Insider