Inflation is holding back a worker-led pandemic economic recovery, but corporate profits have captured more in this recovery than after any previous recession, according to new analysis by Canadian Centre for Policy Alternatives (CCPA) Senior Economist David Macdonald.

Macdonald examined how corporations and workers fared following the six recessions over the past 50 years and discovered corporate profits went up by an unprecedented 2.8 points of GDP amid the COVID-19 pandemic.

“The pandemic economic recovery for corporate profits is completely unprecedented in recent Canadian history,” says Macdonald. “Corporate profits have recovered far faster and captured much more of our economy than following any previous recession, by a wide margin.

“Meanwhile, workers’ wages are falling behind inflation and capturing much less of post-recession economic growth than after most recessions. The net result is a historic realignment of who benefits from economic growth in Canada away from workers and toward corporations. Despite this, the corporate lobby and economists continue to blame wages for inflation.”

Among the key findings in Macdonald’s analysis:

• Over the past 50 years, Canada has experienced six recessions: In the 1974, 1990 and 2008 recessions, workers ended up better off than corporations. In the 1981 and 2020 recessions, corporations had the upper hand. In 2015, there was little change.
• The corporate profit-to-GDP ratio in this pandemic recovery is higher than any recovery in the past half century in Canada: In the fourth quarter of 2019, corporate profits captured 12.4 per cent of GDP. By the first quarter of 2022, corporate profits had risen to 15.2 per cent of GDP.
• On the flipside, workers have lost ground in this recovery: Total employee compensation lost 0.8 points of GDP in the two years since the recession began. This isn’t quite the worst loss following a recession in the past 50 years—which was 0.9 points in the 1981 recession—but it comes close.

“What is unprecedented is how much the corporate sector has managed to capture the gains from the current recovery despite rising inflation. Meanwhile inflation whittles away at workers’ real wages,” Macdonald says. “The truth is that corporations are finding ways to profit in this recovery and those profits are one of several contributors to inflation, not workers’ wages.”

Read Truth Bomb: Corporate sector winning the economic recovery lottery; workers falling behind here.

media release, CCPA