A boom in corporate profits, a bust in jobs, wages

[Betonblck]

WASHINGTON (AP) -- Strong second-quarter earnings from McDonald's, General Electric and Caterpillar on Friday are just the latest proof that booming profits have allowed Corporate America to leave the Great Recession far behind.

But millions of ordinary Americans are stranded in a labor market that looks like it's still in recession. Unemployment is stuck at 9.2 percent, two years into what economists call a recovery. Job growth has been slow and wages stagnant.

"I've never seen labor markets this weak in 35 years of research," says Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.

Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009, according to Sum and other Northeastern researchers.

In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.

Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That's compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession.

What's behind the disconnect between strong corporate profits and a weak labor market? Several factors:

-- U.S. corporations are expanding overseas, not so much at home. McDonalds and Caterpillar said overseas sales growth outperformed the U.S. in the April-June quarter. U.S.-based multinational companies have been focused overseas for years: In the 2000s, they added 2.4 million jobs in foreign countries and cut 2.9 million jobs in the United States, according to the Commerce Department.

-- Back in the U.S., companies are squeezing more productivity out of staffs thinned by layoffs during the Great Recession. They don't need to hire. And they don't need to be generous with pay raises; they know their employees have nowhere else to go.

-- Companies remain reluctant to spend the $1.9 trillion in cash they've accumulated, especially in the United States, which would create jobs. They're unconvinced that consumers are ready to spend again with the vigor they showed before the recession, and they are worried about uncertainty in U.S. government policies.

"Lack of clarity on a U.S. deficit-reduction plan, trade policy, regulation, much needed tax reform and the absence of a long-term plan to improve the country's deteriorating infrastructure do not create an environment that provides our customers with the confidence to invest," Caterpillar CEO Doug Oberhelman said.

Caterpillar said second-quarter earnings shot up 44 percent to $1 billion-- though that still disappointed Wall Street. General Electric's second-quarter earnings were up 21 percent to $3.8 billion. And McDonald's quarterly earnings increased 15 percent to $1.4 billion.

Still, the U.S. economy is missing the engines that usually drive it out of a recession.

Carl Van Horn, director of the Center for Workforce Development at Rutgers University, says the housing market would normally revive in the early stages of an economic recovery, driving demand for building materials, furnishings and appliances -- creating jobs. But that isn't happening this time.

And policymakers in Washington have chosen to focus on cutting federal spending to reduce huge federal deficits instead of spending money on programs to create jobs: "If we want the recovery to strengthen, we can't be doing that," says Chad Stone, chief economist at the Center on Budget and Policy Priorities, a research group that focuses on how government programs affect the poor and middle class.

For now, corporations aren't eager to hire or hand out decent raises until they see consumers spending again. And consumers, still paying down the debts they ran up before the recession, can't spend freely until they're comfortable with their paychecks and secure in their jobs.

Said Van Horn: "I don't think there's an easy way out."
http://finance.yahoo.com/...=1&asset=&ccode=

 

[Betonblck]

Is there any more proof that more tax cuts for the largest corporations is not the solution?

 

[wawaweewa]

When more and more revenue is coming from overseas, Americans are less and less of a necessity.

The truth is, we need to tell these corps to either invest here or %$%$. Just like the Chinese do. In this case, they have it right.
The end game doesn't bode well for Americans. 

 

[elcatfisho]

Up and coming countries are the reason why the US will have a hell of a time getting more jobs. In India, the average salary is pretty low, but it is enough to be considered successful. The way people live there is frugal: they live in 3 generation homes where a cheap salary here in the US is considered more than enough. In the US, we demand certain wages, benefits, and compensations. Why should companies pay the salaries of people who demand more than people who need less and will work more? Companies see this as a way to get more productive output with more people, for even less. It makes no sense, financially speaking, to bring back jobs to the US instead of outsourcing them when there are people who will willingly do it for less.
I don't see a good ending anytime soon, in conclusion.

 

[cornzilla]

Originally Posted by wawaweewa

When more and more revenue is coming from overseas, Americans are less and less of a necessity.

The truth is, we need to tell these corps to either invest here or %$%$. Just like the Chinese do. In this case, they have it right.
The end game doesn't bode well for Americans. 

This. There is no mention of an increased profits in America. All the growth is overseas, it doesn't mean that we are in a recovery, just stagnant. It's simple business, invest for a return. 

 

[wawaweewa]

Originally Posted by cornzilla

Originally Posted by wawaweewa

When more and more revenue is coming from overseas, Americans are less and less of a necessity.

The truth is, we need to tell these corps to either invest here or %$%$. Just like the Chinese do. In this case, they have it right.
The end game doesn't bode well for Americans. 

This. There is no mention of an increased profits in America. All the growth is overseas, it doesn't mean that we are in a recovery, just stagnant. It's simple business, invest for a return. 

The problem is that these US based corps are still benefiting from being US based. Taxpayer funded R&D, political and military protection, political and military agenda which serve to advance their interests, etc. It has to be a 2 way street. If they're contributing less and less to the US then they should be receiving less and less of the aforementioned. However, they keep asking (and receiving) more and more. 

 

[Betonblck]

Originally Posted by wawaweewa

Originally Posted by cornzilla

Originally Posted by wawaweewa

When more and more revenue is coming from overseas, Americans are less and less of a necessity.

The truth is, we need to tell these corps to either invest here or %$%$. Just like the Chinese do. In this case, they have it right.
The end game doesn't bode well for Americans. 

This. There is no mention of an increased profits in America. All the growth is overseas, it doesn't mean that we are in a recovery, just stagnant. It's simple business, invest for a return. 

The problem is that these US based corps are still benefiting from being US based. Taxpayer funded R&D, political and military protection, political and military agenda which serve to advance their interests, etc. It has to be a 2 way street. If they're contributing less and less to the US then they should be receiving less and less of the aforementioned. However, they keep asking (and receiving) more and more. 

BINGO!!!!  If they don't want to create jobs over here, screw them. 

 

[crcballer55]

Probably the most blatantly dishonest article I've read in awhile.  All three companies listed at the top had massive hiring sprees during the last quarter.  Almost HALF of the jobs created in the U.S. last month were created by McDonald's alone.

If you're really concerned with corporate profits, you have two choices.  You can either choose to do business at those companies and help their profit margins.  Or you can invest in those companies and participate in the profits they generate.

 

[bean pie slanga]

I don't spend a penny at Mack Donald's so I don't feel any kind of way about this. Vote with your dollars and you'll sleep better.

 

[Betonblck]

Originally Posted by crcballer55

Probably the most blatantly dishonest article I've read in awhile.  All three companies listed at the top had massive hiring sprees during the last quarter.

If you're really concerned with corporate profits, you have two choices.  You can either choose to do business at those companies and help their profit margins.  Or you can invest in those companies and participate in the profits they generate.

Then your reading comprehension skills need some improvement.  The premise of the article is that corporate profits are up and booming while wages and jobs are still at recession levels.  What is dishonest about that?

 

[wawaweewa]

Originally Posted by crcballer55

Probably the most blatantly dishonest article I've read in awhile.  All three companies listed at the top had massive hiring sprees during the last quarter.

If you're really concerned with corporate profits, you have two choices.  You can either choose to do business at those companies and help their profit margins.  Or you can invest in those companies and participate in the profits they generate.

You ain't going to invest #*%*. Most Americans don't have much to invest. Account for the fact that you're already in the hole to these corps which benefit from your tax dollars and the disparity grows wider. More than 70% of equities are held by 10% of the population. Corporate bonds are held by an even smaller percentage. 
The balance simply isn't there anymore across most sectors. Consumer discretionary, industrials, aerospace, military, defense, conglomerates, and healthcare  are all leeches (some more than others) at this point. 

The high tech and utilities sectors are the only ones that have a net net positive relationship with the average American. 

 

[crcballer55]

Originally Posted by wawaweewa

Originally Posted by crcballer55

Probably the most blatantly dishonest article I've read in awhile.  All three companies listed at the top had massive hiring sprees during the last quarter.

If you're really concerned with corporate profits, you have two choices.  You can either choose to do business at those companies and help their profit margins.  Or you can invest in those companies and participate in the profits they generate.

You ain't going to invest #*%*. Most Americans don't have much to invest. Account for the fact that you're already in the hole to these corps which benefit from your tax dollars and the disparity grows wider. More than 70% of equities are held by 10% of the population. Corporate bonds are held by an even smaller percentage. 
The balance simply isn't there anymore across most sectors. Consumer discretionary, industrials, aerospace, military, defense, conglomerates, and healthcare  are all leeches (some more than others) at this point. 

The high tech and utilities sectors are the only ones that have a net net positive relationship with the average American. 

Of course I'm investing.  Just like Warren Buffet did when the sky was falling in late 2008, he put big bets in Goldman & Berlington Northern and has reaped huge investments from them.  I invest a portion of each paycheck for the long run.  While everyone was sleeping, the market has jumped by 100% from where it bottomed out 2 years ago.

If you think Aerospace isn't a growth sector, you didn't pay much attention to the massive order that American Airlines placed yesterday with Boeing & Leeds.  Boeing will manufacture 200 planes over the next 5 years with the option for 100 more.  That will be creating a lot of jobs in Washington where they are manufactured. 

Let's also not confuse healthcare with health insurance like so many people have done.  We can't overlook the fact that health insurance costs have soured due to the aging boomers and the 2/3 obesity rate of Americans.  But... I guess it's a lot easier to blame faceless corporations for having to compensate for the increased cost of having to take care of people who weren't proactive about their health throughout their lives.

 

[wawaweewa]

Originally Posted by crcballer55

Originally Posted by wawaweewa

Originally Posted by crcballer55

Probably the most blatantly dishonest article I've read in awhile.  All three companies listed at the top had massive hiring sprees during the last quarter.

If you're really concerned with corporate profits, you have two choices.  You can either choose to do business at those companies and help their profit margins.  Or you can invest in those companies and participate in the profits they generate.

You ain't going to invest #*%*. Most Americans don't have much to invest. Account for the fact that you're already in the hole to these corps which benefit from your tax dollars and the disparity grows wider. More than 70% of equities are held by 10% of the population. Corporate bonds are held by an even smaller percentage. 
The balance simply isn't there anymore across most sectors. Consumer discretionary, industrials, aerospace, military, defense, conglomerates, and healthcare  are all leeches (some more than others) at this point. 

The high tech and utilities sectors are the only ones that have a net net positive relationship with the average American. 

Of course I'm investing.  Just like Warren Buffet did when the sky was falling in late 2008, he put big bets in Goldman & Berlington Northern and has reaped huge investments from them.  I invest a portion of each paycheck for the long run.  While everyone was sleeping, the market has jumped by 100% from where it bottomed out 2 years ago.

If you think Aerospace isn't a growth sector, you didn't pay much attention to the massive order that American Airlines placed yesterday with Boeing & Leeds.  Boeing will manufacture 200 planes over the next 5 years with the option for 100 more.  That will be creating a lot of jobs in Washington where they are manufactured. 

Let's also not confuse healthcare with health insurance like so many people have done.  We can't overlook the fact that health insurance costs have soured due to the aging boomers and the 2/3 obesity rate of Americans.  But... I guess it's a lot easier to blame faceless corporations for having to compensate for the increased cost of having to take care of people who weren't proactive about their health throughout their lives.

You're confusing things. We're not talking about the profitability of American Corps (they're as profitable as ever). We're talking about the present day value that they add to the US accounting for the amount of resources that they extract from US by being US based corps. 


As an aside, I don't care how much of each paycheck you invest. Odds are, after 40-50 years you'd have gone through numerous busts and a lifetime of inflation eating away at your gains.  1950- 1999 America, ain't coming back. Too many people are looking at the US' golden age as the rule. 

 

[bboy1827]

The funniest thing, most people don't know why we have corporations, or even what corporations are.


They are a group of people who are charted by the government to operate as a single person, with all the rights as a single person, and starting around the turn of the 19th century, none of the responsibilities. Why are they good? Because they are the tools which drive industry for the public. Why were they formed? In order to benefit society i.e build bridges, found new technologies etc. Are they working? NO!! Corporations are first responsible to their shareholders, not the public. As such they are going to place more on profit margins than in helping the public. Could you imagine a corporation running at a deficit? No, if they were that would mean that they are providing for society but since their interests aren't for society, they are in it for their shareholders....


Long story short, Corporations have failed, some charters should be pulled and I'm pissed that they are getting tax breaks and I don't have a good job although I'm highly qualified.

 

[likethematrix]

Originally Posted by bboy1827

The funniest thing, most people don't know why we have corporations, or even what corporations are.


They are a group of people who are charted by the government to operate as a single person, with all the rights as a single person, and starting around the turn of the 19th century, none of the responsibilities. Why are they good? Because they are the tools which drive industry for the public. Why were they formed? In order to benefit society i.e build bridges, found new technologies etc. Are they working? NO!! Corporations are first responsible to their shareholders, not the public. As such they are going to place more on profit margins than in helping the public. Could you imagine a corporation running at a deficit? No, if they were that would mean that they are providing for society but since their interests aren't for society, they are in it for their shareholders....


Long story short, Corporations have failed, some charters should be pulled and I'm pissed that they are getting tax breaks and I don't have a good job although I'm highly qualified.

qft.
cut the taxes they still go overseas. raise taxes they still go.

we are in a lose lose.

 

[wawaweewa]

Originally Posted by likethematrix

Originally Posted by bboy1827

The funniest thing, most people don't know why we have corporations, or even what corporations are.


They are a group of people who are charted by the government to operate as a single person, with all the rights as a single person, and starting around the turn of the 19th century, none of the responsibilities. Why are they good? Because they are the tools which drive industry for the public. Why were they formed? In order to benefit society i.e build bridges, found new technologies etc. Are they working? NO!! Corporations are first responsible to their shareholders, not the public. As such they are going to place more on profit margins than in helping the public. Could you imagine a corporation running at a deficit? No, if they were that would mean that they are providing for society but since their interests aren't for society, they are in it for their shareholders....


Long story short, Corporations have failed, some charters should be pulled and I'm pissed that they are getting tax breaks and I don't have a good job although I'm highly qualified.

qft.
cut the taxes they still go overseas. raise taxes they still go.

we are in a lose lose.

Not necessarilly.
What the Chinese are doing is right. They're protecting their own interest.

What they tell these crops is basically, "Invest here or you can't access the market (sell to our consumers)". 

 

[b smooth 202]

theres only one way out of this

 

[crcballer55]

Originally Posted by wawaweewa

Originally Posted by crcballer55

Originally Posted by wawaweewa


You ain't going to invest #*%*. Most Americans don't have much to invest. Account for the fact that you're already in the hole to these corps which benefit from your tax dollars and the disparity grows wider. More than 70% of equities are held by 10% of the population. Corporate bonds are held by an even smaller percentage. 
The balance simply isn't there anymore across most sectors. Consumer discretionary, industrials, aerospace, military, defense, conglomerates, and healthcare  are all leeches (some more than others) at this point. 

The high tech and utilities sectors are the only ones that have a net net positive relationship with the average American. 

Of course I'm investing.  Just like Warren Buffet did when the sky was falling in late 2008, he put big bets in Goldman & Berlington Northern and has reaped huge investments from them.  I invest a portion of each paycheck for the long run.  While everyone was sleeping, the market has jumped by 100% from where it bottomed out 2 years ago.

If you think Aerospace isn't a growth sector, you didn't pay much attention to the massive order that American Airlines placed yesterday with Boeing & Leeds.  Boeing will manufacture 200 planes over the next 5 years with the option for 100 more.  That will be creating a lot of jobs in Washington where they are manufactured. 

Let's also not confuse healthcare with health insurance like so many people have done.  We can't overlook the fact that health insurance costs have soured due to the aging boomers and the 2/3 obesity rate of Americans.  But... I guess it's a lot easier to blame faceless corporations for having to compensate for the increased cost of having to take care of people who weren't proactive about their health throughout their lives.

You're confusing things. We're not talking about the profitability of American Corps (they're as profitable as ever). We're talking about the present day value that they add to the US accounting for the amount of resources that they extract from US by being US based corps. 


As an aside, I don't care how much of each paycheck you invest. Odds are, after 40-50 years you'd have gone through numerous busts and a lifetime of inflation eating away at your gains.  1950- 1999 America, ain't coming back. Too many people are looking at the US' golden age as the rule. 

The problem is not the corporations themselves (unless we want to talk about trust busting again).  The problem is that our tax code has been very similar to what congress did with TARP and the banks.  They give breaks/give money with the expectation that the company will spend it the way they want.  However, they put no formal strings on the money and then wonder why business aren't doing what it was intended for.  If you want companies to repatriate their money you give them an incentive to bring it back in and create more jobs.  You don't tax them more to create more revenue and then wonder why they are pulling the Double Irish Dutch Sandwich trick to avoid bringing the money back to the States that they made overseas.

 

[wawaweewa]

Originally Posted by crcballer55

Originally Posted by wawaweewa

Originally Posted by crcballer55

Of course I'm investing.  Just like Warren Buffet did when the sky was falling in late 2008, he put big bets in Goldman & Berlington Northern and has reaped huge investments from them.  I invest a portion of each paycheck for the long run.  While everyone was sleeping, the market has jumped by 100% from where it bottomed out 2 years ago.

If you think Aerospace isn't a growth sector, you didn't pay much attention to the massive order that American Airlines placed yesterday with Boeing & Leeds.  Boeing will manufacture 200 planes over the next 5 years with the option for 100 more.  That will be creating a lot of jobs in Washington where they are manufactured. 

Let's also not confuse healthcare with health insurance like so many people have done.  We can't overlook the fact that health insurance costs have soured due to the aging boomers and the 2/3 obesity rate of Americans.  But... I guess it's a lot easier to blame faceless corporations for having to compensate for the increased cost of having to take care of people who weren't proactive about their health throughout their lives.

You're confusing things. We're not talking about the profitability of American Corps (they're as profitable as ever). We're talking about the present day value that they add to the US accounting for the amount of resources that they extract from US by being US based corps. 


As an aside, I don't care how much of each paycheck you invest. Odds are, after 40-50 years you'd have gone through numerous busts and a lifetime of inflation eating away at your gains.  1950- 1999 America, ain't coming back. Too many people are looking at the US' golden age as the rule. 

The problem is not the corporations themselves (unless we want to talk about trust busting again).  The problem is that our tax code has been very similar to what congress did with TARP and the banks.  They give breaks/give money with the expectation that the company will spend it the way they want.  However, they put no formal strings on the money and then wonder why business aren't doing what it was intended for.  If you want companies to repatriate their money you give them an incentive to bring it back in and create more jobs.  You don't tax them more to create more revenue and then wonder why they are pulling the Double Irish Dutch Sandwich trick to avoid bringing the money back to the States that they made overseas.

The money overseas is peanuts in the long run. 
Imo, the large problem is that there's no loyalty anymore. They don't see themselves as  US corps but international corps. The reality is they're US corps that do international business. If they want to be international corps then they can incorporate in the "Nation of International". Wherever they think it is. 

It used to be that Congress and the Executive made sure that the corps knew where their loyalty lay. Now they're completely bought off in addition to just being plain dumb politicians whose only aptitude is yapping to get votes. 

 

[crcballer55]

Originally Posted by wawaweewa

Originally Posted by crcballer55

Originally Posted by wawaweewa

You're confusing things. We're not talking about the profitability of American Corps (they're as profitable as ever). We're talking about the present day value that they add to the US accounting for the amount of resources that they extract from US by being US based corps. 


As an aside, I don't care how much of each paycheck you invest. Odds are, after 40-50 years you'd have gone through numerous busts and a lifetime of inflation eating away at your gains.  1950- 1999 America, ain't coming back. Too many people are looking at the US' golden age as the rule. 

The problem is not the corporations themselves (unless we want to talk about trust busting again).  The problem is that our tax code has been very similar to what congress did with TARP and the banks.  They give breaks/give money with the expectation that the company will spend it the way they want.  However, they put no formal strings on the money and then wonder why business aren't doing what it was intended for.  If you want companies to repatriate their money you give them an incentive to bring it back in and create more jobs.  You don't tax them more to create more revenue and then wonder why they are pulling the Double Irish Dutch Sandwich trick to avoid bringing the money back to the States that they made overseas.

The money overseas is peanuts in the long run. 
Imo, the large problem is that there's no loyalty anymore. They don't see themselves as  US corps but international corps. The reality is they're US corps that do international business. If they want to be international corps then they can incorporate in the "Nation of International". Wherever they think it is. 

It used to be that Congress and the Executive made sure that the corps knew where their loyalty lay. Now they're completely bought off in addition to just being plain dumb politicians whose only aptitude is yapping to get votes. 

Please elaborate on the point that "congress and executives made sure that the corps knew where their loyalty lay".  If you mean that they invested primarily in the U.S. in the past that's because that's where the growth was.  Now, we have become highly leveraged here and are beginning to deflate while places like Brazil and India are booming with new innovations and infrastructure.

 

[ricky409]

bump.

this is good info.

 

[jeff3424]

i'm a fan of this thread. nice to see some intelligent convo on NT

then and again i'm unemployed @ 23 with a finance degree currently collecting dust lol so what do i know

 

[rashi]

Originally Posted by cguy610

Is there any more proof that more tax cuts for the largest corporations is not the solution?

What cuts in taxes? The largest corporations pay 0 taxes.

 

[wr]

Originally Posted by rashi

Originally Posted by cguy610

Is there any more proof that more tax cuts for the largest corporations is not the solution?

What cuts in taxes? The largest corporations pay 0 taxes.

im still surprised more people don't understand this. the average american pays more in taxes than these companies. Both before and after we get paid

 

[rashi]

Originally Posted by Wr

Originally Posted by rashi

Originally Posted by cguy610

Is there any more proof that more tax cuts for the largest corporations is not the solution?

What cuts in taxes? The largest corporations pay 0 taxes.

im still surprised more people don't understand this. the average american pays more in taxes than these companies. Both before and after we get paid

The average American doesn't care to know, they need a villain. The call for raising taxes on the "rich" are actually taxes on the Middle Class. Raising taxes on the so called "rich" raises taxes on the small business, and with our monetary policy, inflation and the rise in prices of goods/services gets way more expensive for the Middle Class and Lower classes.