Some US firms strike gold during pandemic
Large companies reaping big profits so far in 2020
Millions are out of work, bankruptcies are soaring, tourism has hit a standstill and financial markets are volatile, but some American companies are reaping “dramatic profits,” according to a new study by an international poverty-fighting group.
An analysis published Wednesday by Oxfam, a Britain-based activist organization, found that 17 of the top 25 most profitable U.S. corporations, including Microsoft, Intel, Johnson & Johnson, Facebook, Pfizer and Visa, are expected to make almost $85 billion more in 2020 in what it called “super-profits” than in previous years.
All this during a coronavirus pandemic that has ushered in a Great Depression-caliber slump.
“The COVID-19 pandemic has exposed deep inequalities and massive failures in our economic system, leaving tens of millions of people in the United States without jobs, devastating public services, and bankrupting countless small businesses,” said Irit Tamir, director of the private sector department at Oxfam America. “Yet at the same time, thanks to a combination of government assistance and pure luck, a handful of corporations are raking it in and making already rich shareholders even richer.”
“Profit is not a four-letter word, but when such dramatic and excessive profits are made during a time of global crisis and distributed to the wealthiest, the situation is not just fundamentally unjust, it is also economically inefficient.” Niko Lusiani Senior adviser on corporate advocacy at Oxfam America
Oxfam’s analysis revealed that overall, the 25 most profitable large U.S. companies have, on average, 11% higher net profits in the first six months of 2020 compared with their average net profits for the same time period going back to 2016.
But some companies are doing far better than that. Microsoft is expected to make 82% more net profit in 2020 than it averaged in the previous four years; Merck, 81% more; and CVS Health, 61% more.
The study noted that the firms that have done extraordinarily well amid the pandemic have tended to make or provide essential goods and services such as Internet communications, key medicines and diverse consumer products.
The market capitalization of Moderna, a U.S. pharmaceutical firm viewed as a strong contender to produce a COVID-19 vaccine, has more than tripled since February to almost $32 billion, according to a manual calculation using its share price.
Still, by contrast, small U.S. companies have reported that their earnings have halved in the first quarter of 2020, with analysts expecting these small firms to lose a stunning 85% in profits in the second quarter, according to Oxfam. The report’s authors were assisted in the study by former and current tax experts from the world’s leading accountancy firms as well as academics from several U.S. colleges.
Oxfam further found that in 2020 the top 25 most profitable U.S. corporations are set to distribute 99% of net profits to shareholders who are overwhelmingly white and predominantly male, further exacerbating existing inequalities. Numerous studies have shown, for example, that the poverty rate for Black Americans is double the white rate.
Oxfam’s analysis estimates that 9 out of every 10 dollars of “pandemic profits” will end up with white Americans in 2020. Black and Latinx families – already disproportionately affected by COVID-19 – will receive only 16 cents each.
“Profit is not a four-letter word, but when such dramatic and excessive profits are made during a time of global crisis and distributed to the wealthiest, the situation is not just fundamentally unjust, it is also economically inefficient,” said Niko Lusiani, senior adviser on corporate advocacy at Oxfam America and lead author of the analysis.