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.