Celebrate Corporate Profit Freedom Day - April 15, 2010!

As many people are filing last-minute tax returns on April 15th, another important thing will be happening that day, Corporate Profit Freedom Day.  This is the day on which working people will have finally worked enough to pay for the corporate profits going to the wealthy and powerful.

Corporate Profit Freedom Day (CPFD) in 2010 will officially occur on April 15th.  That is because the total of profits and income to corporate entities and the wealthiest individuals was 28.8% of the total income available for everyone. (in 2009, the year used to calculate this year's CPFD). That means that, out of 365 days, a worker has to let more that 105 days worth of income go to corporations and the wealthy before any goes to his or her own family.

Another way of looking at it is that a typical worker must work 11.4 hours out a 40 hour workweek to create profits for corporations and the wealthy. That is almost one and a half days out of a five-day workweek.

So, think of it like this: If you work a Monday to Friday workweek, you have to work all of Monday and half of Tuesday to support yachts, mansions and Wall Street power for the very rich.  Only after lunchtime on Tuesday do you start actually creating income for you and your family.

Corporate Profit Freedom Day has also been getting later over the past several decades.

In 1970, fewer than 51 days out of the year went to corporate profits. Corporate Profit Freedom Day based on that year's numbers was February 25th.  The growth to the current 105-plus days per year for corporate profits shows a trend over the past few decades of increasing concentration of wealth, in the hands of an elite few, at the expense of everyone else.

Looking at this graph, it is easy to see why working people are feeling increasingly squeezed: More and more of their working time and the fruits of their labors are going to the wealthy and Wall Street inside of to their paychecks.

But, as lamentable it is for being so late in the year, working people will be able to at least take some comfort on April 15th.  At least on that day, they are working for themselves and their families instead of to make more profits for the rich and powerful.

To see how Corporate Profit Freedom Day is calculated, see the previous article on this site.

Introducing Corporate Profit Freedom Day beta 0.1

The Corporate Profit Freedom Day (CPFD) project is intended to be an open one, in which the way CPFD is calculated is open and public.  It is available for scrutiny and open to constructive critique.  In fact, as noted, it is still is a beta (preliminary) form, so it is fully intended that this statistic, and the date on which CPFD is celebrated, will change as the method of calculating it is improved.

So, in that spirit, here is how the beta CPFD 0.1 is calculated:

1. "Total Individual Income" is calculated as the sum, from the Bureau of Economic Analysis (BEA) Table 1.10 "Gross Domestic Income by Type of Income", of (A) "Compensation of employees, paid", (B) "Proprietors' income with inventory valuation and capital consumption adjustments" and (C) "Rental income of persons with capital consumption adjustment".
2. The "Percent of Income Going to the Richest 1%" is from "Top Incomes in the Long Run of History" by Emmanuel Saez Tony Atkinson and Thomas Piketty, revised January 2010, forthcoming Journal of Economic Literature. (Data [Excel]).  Since the latest numbers from this source are to 2007, the 2007 numbers are used from the current year.
3. The "Income for Wealthy Individuals" is (1) times (2).
4. "Total Corporate Profit" is calculated as the sum (3) and "Profits after tax with inventory valuation and capital consumption adjustments" from the BEA Table 1.10.
5. "Total Base Income" is calculated as the sum of (1) and "Profits after tax with inventory valuation and capital consumption adjustments" from the BEA Table 1.10.
6. "Percent of Base Income Going to Corporate Profits" is calculated by dividing (4) by (5).
7. The "Number of Calendar Days Going to Corporate Profits" is calculated by multiplying (6) by the number of calendar days in the year.
8. By counting, from January 1st, the number of days calculated in (7), the date on which "Corporate Profit Freedom Day" occurs can be determined.  This is CPFD beta 0.1

And, to be more specific, (8), above, is to be referred to as CPFD-C, based on the calendar year.  A separate CPFD-W, based on a typical number of annual weekdays, 260, is also calculated, but the standard Corporate Profit Freedom Day is to be considered the CPFD-C.

Included in this method of calculating corporate profits is an estimate of the share of various forms of individual income that go to the wealthiest 1%.  That is because the purpose of Corporate Profit Freedom Day is to calculate how much of the year the working people of the United States labor to support both the accumulated wealth and lavish lifestyles of those with control of the wealth and power in our country.  To only count the booked profit of corporate entities would, as one can see from the statics calculated, miss the vast bulk of the true profits in the nation.

Another note is that CPFD is calculated using the most up-to-date statistics, which means that each year's CPFD is actually calculated from the previous year's final numbers.  A future version of CPFD may include a method of imputing the trends in progress for a year to get a more up-to-date picture, but beta 0.1 version relies on the more stable previous-year method.

Once again, constructive critique of the method of calculating Corporate Profit Freedom day is welcome and encouraged as the work now begins on the next, more refined, version of the CPFD statistic.

Thanks!

Welcome to Corporate Profit Freedom Day

Welcome!

This is a new website designed to reveal something that is not often talked about the press, politics and certainly not in economics.  That is, just how much of the work you do every year goes not to you, but to the profits of corporations, big business and the wealthiest people.  You know: corporate profits.

How much of the year you must work to make the wealthy wealthier?  We start on January 1st and "Corporate Profit Freedom Day" is the last day of the year you must work to feed corporate profits and the wealthy's lavish lifestyles for that year.

Since this is an effort to calculate something that does not seem to have been calculated before, it is certain that there will be some mistakes, and constructive critique is welcome.  As such, this new statistic, Corporate Profit Freedom Day, should be considered, as they say in software design, a "beta" version.  In other words, it will be refined over time.

Since preliminary estimates show that Corporate Profit Freedom Day is coming up soon, there will be an announcement of this impending date very shortly.

Thanks for reading!

~Plebicola