Much blame has been placed on the Obama administration for not creating enough new jobs and to lower the high employment rate which seems to stay at a stubborn 9.2%.
Yet corporate profits according to the news this morning are booming, but they are not hiring; why? It appears corporate America has left the Great Recession but the average American is still stuck in the mud.
OVERSEAS EXPANSION appears to be where the big money is for the corporations. Wages and salaries accounted for just 1 % of economic growth in the first 18 months after economists declared that the recession had ended in June 2009.
Yet in the same period after the 2001 recession, wages and salaries accounted for 15 %. They were 50% after the ’91-’92 recession and 25 % after the ’81-’82 recession.
However, corporate profits, by contrast, accounted for a unprecendented 88% of economic growth during those first 18 months, compared with 53% after the 2001 recession.
The reason for the huge corporate profits and a weak labor market is U.S. corporations are expanding overseas, not much at home.
McDonald’s and Caterpillar which just reported record earnings claim overseas sales growth outperformed the U.S. in the last quarter.
U.S. based overseas companies in the 2000s added 2.4 million jobs and cut 2.9 million jobs in the U.S. Back home companies are squeezing more productivity out of staffs thinned out by layoffs during the recession; don’t need to hire, don’t need to be generous with pay raises because they know their employees have nowhere to go. Companies not sure about consumer spending are holding onto $1.9 trillion in cash they’ve accumulated.
Caterpillar’s second-quarter earnings shot up 44%, General Electric, which has paid no taxes for several years, earnings were up 21% to $3.76 ( and Republicans don’t think we need to close tax loop-holes) and McDonald’s quarterly earnings increased 15%.
I feel sorry for my kids, grandkids and future generations how they are going to make a living. To me the profits are a double-edged sword, hate to see the loss of jobs, but love those stock dividends. And that’s what companies must do is to make their stock attractive to buyers and that is done by giving higher dividends at the expense of the American worker.
Wasn’t NAFTA supposed to create jobs in this country? The bill was supposed to open more opportunities for U.S. companies to ship more goods overseas, more markets, instead we shipped our companies overseas.