Thinking of joining a private sector union? Now’s the time

The balance between profits and wages is out of whack. But wages for workers in unions are growing faster than those not in unions.

We've written several times here that we don't think the current balance between corporate profits and ordinary salaries is sustainable. The chart below makes the point nicely.


Profits in the US have risen hugely as a percent of GDP in the last decade or so. Wages have fallen as a percentage of GDP from near 50% to near 40% and are now far from their historical average level.

If you believe at all in reversion to the mean, you will wonder how long this can last. The answer might be not as long as the deflationistas might think.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

In his recent letter to investors, Crispin Odey looks at "how differently private sector wages are growing in America for unionised labour forces and non-unionised". The second chart (from Odey) shows this.


It suggests, as Odey puts it, "that there is huge value in being in a union at the moment." It also suggests that those who are not in unions don't yet appreciate the negotiating power they have with their employers given that unemployment is currently sitting at only 5.6% in the US. Surely they soon will.

This is good news for workers why should their share of GDP keep falling?

But, as I have said before, it is very bad news for investors: it guarantees falling profits margins and that is something that US stock market valuations are definitely not pricing in.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.