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Corporations: Record Profits But Still Not Hiring

Corporations: Record Profits But Still Not Hiring

“Job creators.” This phrase gets bandied about frequently in defense of corporations. We can’t tax corporations – they’re job creators. We can’t begrudge all of the money corporations amass – they need that money to become job creators. It turns out, however, that these excuses are just that: despite the fact that corporate profits are at an all-time high, large companies aren’t actually using this money to create new jobs.

Reuters analyzed figures of the 100 largest companies and found a disturbing disparity between the rate at which businesses are profiting and hiring personnel. Between 2001 and 2013, corporations’ profits (adjusted for inflation) have risen an astounding 150%. Simultaneously, hiring has only increased by 31% in that same period.

Although optimists like to imagine that as a company grows it takes on more staff to handle its growing needs, that’s clearly not the case. With profits booming five times faster than the corporations are hiring, companies have found a way to rake in more money while having to share it with fewer employees. So much for being “job creators” after all.

Notably, that modest 31% increase in hiring is on a global scale. Most of the jobs that have been created in the wake of rising corporate profits have been filled overseas. In that respect, at this point, Americans shouldn’t expect that corporate success will have any bearing on jobs in the United States. Those who use corporate profits as the main indicator of a thriving economy are looking at an incomplete picture.

It’s not all bad for American consumers, though. Inexpensive labor abroad allows for cheaper products sold in American markets. The decrease in American jobs offering middle class wages appears to hit the overall economy even harder, though, meaning the cheaper products are probably not worth the tradeoff (not to mention the ethical questions frequently involved in cheaper labor abroad).

As for the jobs that have been created in the United States, most of them are low wage positions. Corporations certainly are not reinvesting these profits into expanding the middle class. Matthew Slaughter, a professor at Dartmouth’s Tuck School of Business, explained to Reuters that “whether you like it or not,” the rise in productivity isn’t actually a boon for the economy since only a small amount of people are reaping the financial rewards.

Reuters’s examination also found that plenty of companies – about one in three — are even going so far as to cut jobs as they see their profits rapidly grow. In a 12 year span, Verizon doubled its profits while simultaneously laying off 30% of its staff.

It’s time to dispel the myth that corporations that turn huge profits are good for society. Rather than using that wealth to create jobs, they hoard this money to ensure that a small percentage of executives have all of the money. Laborers are working harder than ever for less compensation and we choose to ignore this injustice because it’s just “capitalism.”

Perhaps, then, it’s time to reconsider how capitalism is working out for us altogether.

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133 comments

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12:42PM PDT on Aug 25, 2014

There is no such thing as Obamacare sara/ There is the affordable care act that is really a republican plan that the Heritage foundation dreamed up long ago. You didn’t really beleive Obama wrote this thing up by himself did you?? Any abuses happenbing are the health care insurers using every single loophole they can to subvert the program. The rest of the problems are coming from Republican governors refusing to set up exchanges that the ACA utilizes. The right WANTS this to fail and in fact are ACTIVELY trying to undermine it ANY way they can. Obama isnt failing you…..your own republican representatives are.

5:16AM PDT on Aug 25, 2014

They are worried about hiring because of ObamaCare restrictions and regulations!

4:48PM PDT on Aug 21, 2014

Don't you love that trickle down economy?

1:28PM PDT on Aug 21, 2014

I am SICK of the GLUTTED with profit Corporations whining because they have to pay something back for their HUGE frikking advantages opened up for them BY the very government they curse on TV and radio and in blogs.

Obama didnt create this mess as much as you clowns keep liking to portray it. He inherited this entire climate. What the corps are doing is playing a high dollar game of chicken with their own country and its future. If you are TRULY serious about cutting defecits and costs then man up and scream about all these damned wars. The Middle east is simpy trying to bakrups US. The UAE and Saudi Arabia are HUGELY rich countries. THEY are doing NOTHING to stop any of this. If THEY were all so worried about it THEY would be stopping it. They simply watch us bankrupt ourselves becasue in the end THEY will win and ARE winning no matter which “army” wins. Did we learn NOTHING from England and Rome??? We have lost our moral compass and money tules EVERYTHING now!!

1:20PM PDT on Aug 21, 2014

The defecit is coming down slowly but surely Eric. And dont bring your false equivalencies like that. OUR houselhold buget has NEVER EVER been like the governments budget.
Thats jsut bulshit thinking from the right. Your party created most of this debt with the 8 years of UNFUNDED wars that Bush preteneded were costing us nothing. And all the while CUTTING Taxes and pretending that was good for the country. It OBVIOULY wasnt or we wouldnt be in the situation we are in. LONG berfore Obama ws president we wrre spending WAYYYYYYYYYYY more than we were bringing in in Taxes.

Like everything else they misjudged how badly corporations would act when they let the floodgates open for a global economy. They misjudged our competitors and their tenacity. Corporations got IMMENSELY rich from the practice and WE as a nation got immensely poor. We are number one is hardly anything anymore. WE no longer have the nbest education…..we surely dont have the best medical system……. our infrstructure is crumbling…..the list is endless. BUT profits are RECORD BREAKIN HIGH!!! Prodictivity is hugely up! And all I hear for this gloobal windfall is WHINING!!!!!
We have to pay more taxes than Ireland…..we have to pay more taxes than Cjina and Sri Lanka HAHAAHAHAHAAHAHAHAAH
Of COURSE they do, Those countries WISH they had what we have in this country. Well, not anymore LOLOLOL Because it is all unravelling right in front of us. I am SICK of the GLUTTED

7:29AM PDT on Aug 21, 2014

What Austerity Robert?
Our government is still running a huge deficit. We can not even start to talk about Austerity for government until we at least balance the budget.

It's no different for a family that has maxed out their credit cards. Do you cut back on spending and start paying down the debt (Austerity) or take out another credit card?

7:26AM PDT on Aug 21, 2014

How much of those profits are from another country? The problem is mainly our tax code that discourages global corporations from investing profits in the USA. We are the only country that double taxes Corporations on their foreign profits.

Then there is the trickle down economic policies of the FED and Obama that have resulted in profit on paper (wall street) but inflation for the rest of us.

We need a change in leadership and a new direction is we our to save the USA.

3:50AM PDT on Aug 20, 2014

ty

6:48PM PDT on Aug 19, 2014

We are all slaves and a number to Corporate America and if you don't like it quit and move on...in one day some other jerk will fill your spot.

10:12AM PDT on Aug 19, 2014

Why hire more people when you can pocket that extra $$$$--greed has no cure.

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