Profit = Revenue – Cost

Menzie Chinn looks at this picture from the Economic Report of the President:

And says that profits have been going up because the markup has been going up. Yes, I agree. If you go back to 1980 or so, the markup has gone up from about 1.5 to 1.75. This, of course, if the same period over which median wages have stagnated.

The question is why? Why haven’t workers enjoyed the increase in productivity in the same way they did in the 1947-1973 period?

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