Profits Are Booming. Why Aren’t Jobs?

[expat_panama]

Typical NYT anti-business hit piece from last January.

The update is that current numbers over last quarter show corp profits down 2%, corp. taxes up 7%, and employee comp. no change. IMHO the NYT is good for finding out what the latest Marxist party line is, but these days anyone interested in corporate finance can check the BEA directly and find out that for years going into the recession profits fell while pay increased.

I'm trying to remember the 2008 NYT headline "Profits are tanking, Why Aren't Jobs?" There wasn't one, and the bottom line here is that mean old corporations pay six bucks in employee comp. for ever dollar proft, and when profits tank pay doesn't.

 

[Dont Taz Me Bro]

Because the future is far too uncertain right now.

 

[boedicca]

Most job creation is by small businesses, which are not seeing Booming Profits.

Don't confuse the Mega Corps Government Crony sector with the Entrepreneurial one.

Small businesses are being buried in current regulatory and tax costs...and are threatened with increased future ones. Economic growth is moribund. Without confidence that the business will be able to grow enough to recoup the investment in additional staff, there is no reason to hire anyone.

This is why Obamanomics is an Epic Fail.

 

[expat_panama]

Most job creation is by small businesses, which are not seeing Booming Profits. Don't confuse the Mega Corps Government Crony sector with the Entrepreneurial one...

Right, too much confusion here, let's get our facts straight. The Small Business Admin. has a great FAQ site that explains how virtually all of the 6 million US employers are corporations, and all but 18 thousand are small business.

 

[auditor0007]

The reason companies are not hiring is very simple. They realize that people do not have enough disposable income to purchase any new goods. The companies that are thriving are the ones that deal with everyday consumable goods that must be purchased. Those that deal in producing non-essential goods are in trouble. So why is it that nobody has money to purchase goods? It's not because they are overtaxed. It is simply that the vast majority of the money is filtered to the top, leaving those on the bottom unable to even make ends meet.

The minimum wage now has the only 75% of the purchasing power it did in the 70's. Along with the minimum wage being much lower in purchasing power, everyone at the bottom and heading into the middle are earning less than they did in the 70's. If people were being paid fair wages for their work, they would have more to spend and the economy would grow. You would see much more growth and it would benefit everyone. This idea that companies cannot afford to pay people more has helped stagnate growth everywhere. Keeping wages low, keeps the profits for those at the top, but it destroys the middle class and it forces more people at the lower end to seek assistance from the government, and guess who pays for that?

Seriously, greed has fucked this country up something terrible. In the end it will eventually hit those at the top too. There will be fewer and fewer well to do, and then things will begin to shift as those holding the purse strings will no longer be able to fool the majority into thinking that creating an uber wealthy class while impoverishing everyone else is a smart thing.

 

[whitehall]

Corporations are afrad of the incoherent agenda of the Obama administration. They are afraid to expand or hire new employees because nobody knows what quirky scheme or new tax the neo-socialists have up their sleeves. How do you trust a president who refered to the US Chamber of Commerce as a sinister tool of the republican party. Corporations are afraid of the radical environment agenda that could close them down in a heart beat just by regulating a product to death. We saw Obama's choice of appointment to his "green jobs panel". Van Jones had no experience in green jobs. He was a communist who once led an arson and looting rampage. Where are the green jobs?

 

[bugs]

we are in a economic depression.. just watch home values continue to plummet!

 

[Mr Natural]

Corporations are afrad of the incoherent agenda of the Obama administration. They are afraid to expand or hire new employees because nobody knows what quirky scheme or new tax the neo-socialists have up their sleeves. How do you trust a president who refered to the US Chamber of Commerce as a sinister tool of the republican party. Corporations are afraid of the radical environment agenda that could close them down in a heart beat just by regulating a product to death. We saw Obama's choice of appointment to his "green jobs panel". Van Jones had no experience in green jobs. He was a communist who once led an arson and looting rampage. Where are the green jobs?

They could drop corporate tax rates to zero and eliminate every single regulation on the books and it would do nothing to change the fact that foreign workers will work for a fraction of their American counterparts.

 

[Sallow]

The reason companies are not hiring is very simple. They realize that people do not have enough disposable income to purchase any new goods. The companies that are thriving are the ones that deal with everyday consumable goods that must be purchased. Those that deal in producing non-essential goods are in trouble. So why is it that nobody has money to purchase goods? It's not because they are overtaxed. It is simply that the vast majority of the money is filtered to the top, leaving those on the bottom unable to even make ends meet.

The minimum wage now has the only 75% of the purchasing power it did in the 70's. Along with the minimum wage being much lower in purchasing power, everyone at the bottom and heading into the middle are earning less than they did in the 70's. If people were being paid fair wages for their work, they would have more to spend and the economy would grow. You would see much more growth and it would benefit everyone. This idea that companies cannot afford to pay people more has helped stagnate growth everywhere. Keeping wages low, keeps the profits for those at the top, but it destroys the middle class and it forces more people at the lower end to seek assistance from the government, and guess who pays for that?

Seriously, greed has fucked this country up something terrible. In the end it will eventually hit those at the top too. There will be fewer and fewer well to do, and then things will begin to shift as those holding the purse strings will no longer be able to fool the majority into thinking that creating an uber wealthy class while impoverishing everyone else is a smart thing.

This was the major cause of the French revolution.

 

[Sallow]

Corporations are afrad of the incoherent agenda of the Obama administration. They are afraid to expand or hire new employees because nobody knows what quirky scheme or new tax the neo-socialists have up their sleeves. How do you trust a president who refered to the US Chamber of Commerce as a sinister tool of the republican party. Corporations are afraid of the radical environment agenda that could close them down in a heart beat just by regulating a product to death. We saw Obama's choice of appointment to his "green jobs panel". Van Jones had no experience in green jobs. He was a communist who once led an arson and looting rampage. Where are the green jobs?

No..they are not. If that were they case..they got exactly what they wanted during the Bush administration and cut American jobs like mad.

 

[CrusaderFrank]

Same as the New Deal, you have an American Administration that is vehemently hostile to US businesses and in response, they will not make commitments in the face of such villainy and hatred.

 

[auditor0007]

Corporations are afrad of the incoherent agenda of the Obama administration. They are afraid to expand or hire new employees because nobody knows what quirky scheme or new tax the neo-socialists have up their sleeves. How do you trust a president who refered to the US Chamber of Commerce as a sinister tool of the republican party. Corporations are afraid of the radical environment agenda that could close them down in a heart beat just by regulating a product to death. We saw Obama's choice of appointment to his "green jobs panel". Van Jones had no experience in green jobs. He was a communist who once led an arson and looting rampage. Where are the green jobs?

This is pure bullshit. Germany, being one of those horrible "socialist countries" is seeing a great improvement in their economy, and they have more regulations than you can throw a stick at.

Unemployment Falls After Export Surge, Investment Fueled Record GDP Growth - Bloomberg

 

[Toro]

Wages

Profits

Much of those profits are accrued offshore. Also, banks make up a fair amount of profits, and much of banks profits have been generated in the government bond markets by borrowing at 0% in the money markets and investing at 4% in the government bond markets. Finally, many companies are hoarding cash after being traumatized by two collapses of money markets the past decade. Commercial paper markets essentially shut down in 2002 as well.

 

[Toro]

Corporations are afrad of the incoherent agenda of the Obama administration. They are afraid to expand or hire new employees because nobody knows what quirky scheme or new tax the neo-socialists have up their sleeves. How do you trust a president who refered to the US Chamber of Commerce as a sinister tool of the republican party. Corporations are afraid of the radical environment agenda that could close them down in a heart beat just by regulating a product to death. We saw Obama's choice of appointment to his "green jobs panel". Van Jones had no experience in green jobs. He was a communist who once led an arson and looting rampage. Where are the green jobs?

This is pure bullshit. Germany, being one of those horrible "socialist countries" is seeing a great improvement in their economy, and they have more regulations than you can throw a stick at.

Unemployment Falls After Export Surge, Investment Fueled Record GDP Growth - Bloomberg

I think there is some truth that the Obama administration has created caution in the business community, which has inhibited hiring on the margin. However, this is a balance sheet recession, and if there was the most pro-business administration in the history of the nation, we would still be facing the issues we are today. There is simply too much capacity, and it takes time to work through the excess capacity.

 

[CrusaderFrank]

We need Paul Krugman to tell us we need another oh, 2, 3, 6 trillion in Stimulus

 

[CrusaderFrank]

Obama is an Economic Jihadist who strapped Marxist ideology to every Boardroom across the country.

He's repeating page for page the entire New Deal and trying to drag out the recession as long as he can.

 

[iamwhatiseem]

Because the future is waaay to uncertain to spend money now...at the same time companies are still making up for months of negative margins.

 

[Wiseacre]

Most job creation is by small businesses, which are not seeing Booming Profits. Don't confuse the Mega Corps Government Crony sector with the Entrepreneurial one...

Right, too much confusion here, let's get our facts straight. The Small Business Admin. has a great FAQ site that explains how virtually all of the 6 million US employers are corporations, and all but 18 thousand are small business.

From your SBA FAQ link:

2. How important are small businesses to the U.S. economy?
Small firms:
• Represent 99.7 percent of all employer firms.
• Employ half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Generated 65 percent of net new jobs over the past 17 years.
• Create more than half of the nonfarm private GDP.
• Hire 43 percent of high tech workers ( scientists, engineers, computer programmers, and others).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.
• Produce 13 times more patents per employee than large patenting firms.


The truth is the Obama Admin has made it so difficult and risky to startup a new business. That ain't the only reason why the economy is stumbling along, but it's a start.

 

[Toro]

We are living through the failed policies of the last 10 years.

We ignored the Tech Bubble, with the dumbasses who run the economy saying "There is no bubble. Markets don't have bubbles. And if they do, how do you identify them? You can only respond to them. The market knows best!" Well, FFS, Cisco trading at 117x earnings is definitely a fricking bubble, but Greenspan - aka The Worst American Central Banker of All Time - ignored it and in fact cheered it on.

So when the Tech Bubble collapsed, the government embarked in the greatest peacetime stimulus ever up to that time, with massive fiscal and monetary stimulus costing the Treasury trillions of dollars in lost revenues and the Fed keeping rates at 1%. What did that get us? A Housing Bubble! Bernanke said "There is no housing bubble!" By some estimates, up to half the 8 million jobs created in the last decade were somehow related to housing, finance and the mortgage industries. In other words, without the Housing Bubble, up to 4 million jobs would never have been created. 4 million!

So when the Housing Bubble collapsed, what did we do? We embarked on an even greater stimulus than a few years prior, with interest rates cut to zero, trillion dollar deficits, big new programs and extensions of budget-busting tax cuts. Massive distortions to the financial markets and the economy await down the road.

I get a kick out of the clueless partisan ideologues spewing their nonsense. "It's Bush's fault!" "It's Obama's fault!" FFS, what a black hole of ignorance. The US government has essentially been running the same policies for the past decade, with fiscal deficits just growing bigger and bigger, and monetary policy getting worse and worse. Yet, the clueless party cheerleaders keep repeating the same garbage "Elect my guy! The other guy is evil!"

Yeah, like it makes a difference.

 

[expat_panama]

Wages

Profits

This is exactly what I was saying, that for years profits fell while empoyee pay increased and at the worst of the downturn profits were cut by 50%f while pay dropped 5%.

Much of those profits are accrued offshore. Also, banks make up a fair amount of profits, and much of banks profits have been generated in the government bond markets by borrowing at 0% in the money markets and investing at 4% in the government bond markets. Finally, many companies are hoarding cash after being traumatized by two collapses of money markets the past decade. Commercial paper markets essentially shut down in 2002 as well.

Your graphs don't say that, you've given no link/sources. It's really easy to believe you're making that part up.