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President Bush’s appointment of Henry M. Paulson as Treasury Secretary cements the administration’s commitment to placing policy-making posts in the hands of the Fortune 500. Paulson, who is chairman and CEO of Goldman Sachs, has devoted his entire career to building wealth on Wall Street.
Goldman Sachs pulled in $5.6 billion in profits in 2005, up 23.6 percent from 2004, under Paulson’s aggressive management. Goldman now ranks 41st in the Fortune 500 for revenues. By assets, it is the sixth largest company in the United States. Total revenues for the Fortune 500 hit $9.1 trillion – 73.4 percent of U.S. GDP – in 2005. The next generation may see Fortune 500 revenues surpass the total economic output of the United States. With overseas sales added to U.S. income statements and domestic expansion still strong, the Fortune 500 have roughly doubled their economic clout in the last half century. If the Fortune 500 constituted a nation, their economy would be the second largest in the world, and larger than the economies of Japan, the UK, Germany and France combined. With profits of $610 billion in 2005, the Fortune 500 could purchase the entire annual economic output of South Korea, India or Brazil, or absorb the entire U.S. budget deficit for 2006 and 2007. This hugely powerful group of companies is run by men. Only 10 of the 500 Fortune 500 CEOs are women. The situation does not change further down the scale: only 20 of the Fortune 1000 CEOs are women. Among the Fortune 100, there are no female CEOs. Fortune does not provide data on the number of minority CEOs. The ten largest employers in the Fortune 500 employ five million workers. This group includes Wal-Mart, McDonald’s, Sears, Home Depot and Target – all low-wage retailers. Revenues per employee are highest in the energy-related industries, but other sectors, including home building and several health care industries, generate more than $1 million a year in revenues for each employee. Low-wage industries also generate substantial revenues per worker. Food and grocery wholesalers pulled in $637,514 per worker in 2005; beverage companies pulled in $448,812. Industry breakdowns for the Fortune 500 help explain the health care crisis. Profits in the medical products and equipment sector jumped 45 percent in 2005. Profits for medical facilities rose 30 percent. Managed care and pharmacy companies pushed their profits up by more than 25 percent for the year. Profits for pharmaceutical companies rose 16 percent. For the first time in the history of the Fortune 500, Texas displaced New York in 2005 as the state with the largest number of Fortune 500 companies headquartered there. Texas, a heavily Republican state with one of the lowest unionization rates in the nation, is now home to 56 of the Fortune 500. New numbers for 2005 at Fortune 500 companies show revenues up by 10.2 percent while headcount increased only two percent. Modest employment levels and declining real wages account for much of the spectacular 18.8 percent average increase in profits for the year. UPS, the third largest employer in the Fortune 500, increased its workforce by six percent in 2005 while revenues and profits both rose by more than 16 percent. Home Depot, now the fifth largest employer, increased headcount six percent while revenues rose 12 percent and profits jumped 17 percent. Citigroup, the tenth largest employer, added only 12,500 workers in 2005, an increase of just four percent, but its revenues increased 21 percent and profits ballooned by 44 percent. This trend toward generating high revenue and profit growth with fewer employees spells softer labor markets and less leverage for workers across the United States. A new report from McKinsey shows the same phenomenon on a global scale. The largest companies in the world ranked by market capitalization dramatically increased their share of net income while holding headcount relatively stable in the decade that stretched from 1994 to 2004. While the Fortune 500 have regained their ability to raise revenues and profits through higher prices and wider margins, none of this new wealth has been passed along to workers. |
