In today’s News and Commentary, the disparity between corporate profits and worker pay hits a record high, Colorado Governor Jared Polis vetoes pro-union legislation, and MLB announced its salary cap counteroffer to the MLBPA’s initial proposal. 

On Thursday, a report on the domestic GDP and Gross National Income (GNI) indicated that the disparity between workers’ wages and benefits and corporate profits has hit a record high. Workers’ share of the GNI (an income-based GDP equivalent) dropped to 51 percent, the lowest ever recorded, as workers’ compensation grew by less than a percentage point between the first and fourth quarter. Meanwhile, corporate profits grew by 2.7 percent, reaching their highest share of GNI in nearly 80 years at 12.1 percent. Surging energy prices, labor offshoring, and the decline of domestic unions indicate that this trend will only continue. Corporations have continued to engage in the same strategies which have fueled high growth for their shareholders: namely, relentless expansion of AI and corporate consolidation. On the other side of the chasm, backlash by the workforce has emerged in voters’ support for “billionaire” wealth and AI tax proposals, declining support for the Trump administration, and even consumer spending habits. Though the divide between labor’s compensation and corporate profits has become increasingly apparent over the past few decades, and in particular since the pandemic accelerated the disparity, the most recent explanation for the growing gap is the AI boom. To the confusion of industry leaders, AI has become a lightning rod for the labor force’s increasing discontentment with the state of the economy. Commencement speakers at universities, creatives and entertainers, and even Pope Leo XIV have expressed their alignment with popular sentiment by challenging AI’s “forced inevitability” and warning about the dangers of displacing workers.

On Friday, Colorado Governor Jared Polis again vetoed legislation that would repeal the requirement for unions to hold a second vote in order to negotiate union security with employers. Under the current law, unions must win 75 percent of votes in the second election to bargain over union dues, which Governor Polis admitted “makes it nearly impossible to win union security at large employers where organizing might be even more important.” This is the second year in a row he has vetoed this measure, having blocked a Senate bill with identical language last year. This year’s House bill flew through the legislature backed by union leaders, from whom Governor Polis faced significant backlash for his decision. Governor Polis joins Governor Abigail Spanberger of Virginia in the camp of Democratic governors who have recently blocked state legislative attempts to repeal legal roadblocks to union expansion. 

Finally, Major League Baseball (MLB) issued its first counterproposal in negotiations with its players on Thursday, officially declaring the league’s intent to implement a salary cap and floor in professional baseball starting in 2027. The Players’ Association (MLBPA) made its initial offer of economic proposals the day before, which included a raise in the minimum salary for players, increased eligibility and contract guarantees for players under team control in salary arbitration, and a revamped revenue sharing system which would create stronger financial incentives for teams to spend a higher portion of their revenue on payroll and field competitive rosters. Both sides believe that their plan would be the most effective solution to fans’ biggest concern: parity between large and small-market teams. MLB argued that the revenue disparity is due to unchecked spending by large-market clubs, and that restricting teams’ payrolls with a salary cap and floor will reign in their spending. Conversely, the MLBPA said that the source of the competitive imbalance is the lack of spending by smaller-market teams, whose owners can afford to spend more on salaries but choose not to in order to keep profits high while receiving large revenue sharing distributions.