The True Reflection of US Wage Growth and Corporate Profits

After the December employment data was released, mainstream voices either blamed AI automation or criticized tightening immigration policies. But these explanations all overlook a more painful reality.

Look at this set of data: By 2025, federal corporate income tax growth has already turned negative—declining by between 20% and 30%. Meanwhile, private sector wage growth has shrunk to below 0.5%. These two lines are moving downward in sync, a pattern only seen during the 2008 financial crisis and the 2020 pandemic.

Some say it's due to technological shocks, others blame policy tightening, but neither captures the core issue. What is the essence of corporate taxation? It’s a direct reflection of taxable profits. Tax = tax rate × profit. This logic is straightforward. When tax revenue declines without significant changes in tax rates, it can only mean one thing—corporate profits are collapsing.

The data is even more direct: nationwide corporate tax revenue has decreased by 9% to 10% year-over-year (states like Illinois and Florida are at this level), and private employment for the entire year has only increased by 584,000 (compared to 2 million in 2024). Core wages (excluding government, healthcare, hospitality, and other sectors) have actually shrunk by 164,000.

Hiring freezes and stagnant wages are not stories of technological substitution; they are clear signs of demand contraction. When companies can't make money, they naturally won't expand hiring. The logic is that simple.