Job Numbers Worsen Overall. Corporate Profits Continue To Flourish.

By Justin Gardner | Related entries in Business, Jobs, Money

You can’t look at today’s news and do anything but wince. 18,000 jobs created and the numbers in April and May were revised downward.

Unpacking the numbers a bit, 57,000 private sector jobs were created, while budget cuts pushed 39,000 folks out of work in the public sector.

So how are businesses doing?

Quite well…

Combined second-quarter earnings for companies in the Standard & Poor’s 500-stock index are expected to be up 13.6% from a year ago, according to an analysis of Wall Street forecasts by Brown Brothers Harriman. “Corporate profits have been much stronger than the economy in general,” says Charles H. Blood Jr., a market strategist at the New York financial-services firm.

Sure there are worries. There are always worries. But that hasn’t stopped corporations from piling up more cash reserves than they ever have and keeping wages low.

In fact, it’s historic…

[...] they say this recovery is unlike any other in more than six decades because of the “absence of any positive share of national income growth due to wages and salaries received by American workers.”

The study’s authors-Andrew Sum, Ishwar Khatiwada, Joseph McLaughlin and Sheila Palma-write that from the start of the recovery through the end of the first quarter of 2011, national income increased by $505 billion. But none of that growth came from a rise in aggregate wages and salaries.

So what accounted for nearly all of the growth? Pretax corporate profits, which rose by $465 billion-or 92 percent of the total.

The researchers compare this recovery to other post-recession periods since 1975. Of the four, only one-2001-03-saw corporate profits account for more than half (53 percent) of national income growth. And in 1991-92, corporate profits’ share was minus 1 percent, while aggregate wages and salaries accounted for 50 percent.

Let’s make sure we all see that number clearly…92 percent of the total national income has been gained via corporate profits.

What to make of this? Well, I have my opinions, and I’ve shared them before. Frankly, it’s pretty ridiculous, but nobody can force corporations to hire anybody or pay their workers more. But isn’t it a shame that the mood in this country in many C-suites seems to be so stingy? I mean, I get tightening belts, etc, if it’s needed. But it’s clearly not. The big time private sector is flourishing.

And where does that flourish go?

As if you really had to guess…

The final figures show that the median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009. The earlier study had put the median pay at a none-too-shabby $9.6 million, up 12 percent.

Good times.


This entry was posted on Friday, July 8th, 2011 and is filed under Business, Jobs, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

6 Responses to “Job Numbers Worsen Overall. Corporate Profits Continue To Flourish.”

  1. kranky kritter Says:

    The chances of a double dip seem higher now, no? With the gradual withdrawal of federal support propping up state and local governments, there’s got to be a ripple, I think.

    Ultimately, any economic rebalancing involves all levels of government operating within the confines of the actual wealth of its citizens, which is less than we thought it was 4 years ago. That’s going to be extremely painful.

    You have thumped this drum many times before, the one of blaming corporations for not using its profits to hire more people. Irrespective of the merits of connecting those dots, I think it’s a waste of time to expect publically-traded corporations to make hiring decisions on the basis of anything besides demand for products and services, and assessments of market trends. They’re not going to use up their profits to hire new people unless they need those people to keep up with demand. If they do that, and profits decline, those decision-makers get fired by shareholders.

  2. Rich Horton Says:

    I read the title of this and responded “And?”

    Just because companies turn profits does not mean they will necessarily increase their workforce. KK is right. Companies obviously do not see real economic growth in the near term, and no one icreases their workforce going into what is viewed as a stagnant period at best.

    The CCI is dropping at the CEO Confidence number is dropping as well. How else are they gonna react?

    I cannot help but feel its time to rip the band-aid off this economy. The sooner we do so the sooner we can get back to real growth with some real confidence behind it.

  3. WHQ Says:

    Here are three dots that need to be connected:

    Jacob:

    Let’s make sure we all see that number clearly…92 percent of the total national income has been gained via corporate profits.

    kk:

    With the gradual withdrawal of federal support propping up state and local governments, there’s got to be a ripple, I think.

    and

    kk:

    Ultimately, any economic rebalancing involves all levels of government operating within the confines of the actual wealth of its citizens, which is less than we thought it was 4 years ago.

  4. Demise Says:

    Thats because the democrats keep forcing businesses to do more with less. They have learned that 15 adults do more work then 20 teens.

    They have learned that 10 hungry workers who will work for 10 dollars an hour will do more then 20 union workers who have 60 days sick leave built up and 6 weeks vacation and cant be fired.

    American businesses has been forced to do more with less and their are people willing to do it.

    So now its time for the progressives to start demanding that the government take over corporations so they can be wasteful and unprofitable………

    Just like Big Brother.

  5. Demise Says:

    The man who played a major role in revitalizing Las Vegas is bashing President Barack Obama as “the greatest wet blanket to business, progress and job creation in my lifetime.”

    Speaking to investors on a Monday conference call, casino developer Steve Wynn – calling himself a “Democratic businessman” – went on an extended rant against Obama and his policies.

    His customers and the companies he works with “are frightened of this administration,” he said, “and it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America.”

    “Until we change the tempo and the conversation from Washington, it’s not going to change,” added Wynn, according to a transcript of the call’s question-and-answer session.

    Ya can spin it anyway you want but the people with the money are BOTH democrats and Republicans. Probably equally on both sides of the isle and yet NONE of them are spending, investing, hiring and the above by a democratic millionaire pretty well sums it up.

    Left/right it does not matter…..the money is sitting because the policies are about as clear as mud and this president shows about as much intelligence when it comes to the economy as any 10th grader in inner Detroits school system.

  6. Jim S Says:

    Democrat? Not so much.

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