If you feel like the recent recession screwed most of us over and left the fat cats even fatter, the next bit of information is going to really set you off. So I’d suggest that you go into the room with the most padding, remove all sharp objects and concentrate to keep your last meal down. Really, concentrate.
Last week American corporations announced their best quarter ever. $1.659 trillion in profits during the third quarter of 2010. Trillion, with a “T”.
For the last 60 years, since such things were tracked, that’s the biggest profit ever. Even bigger than 2006 when it was a paltry $1.655 trillion.
2006, when the unemployment rate was 4.6%.
Do you see a problem here?
Okay, I understand that today’s economy is full of uncertainty. And that it’s important for corporations to stash away some cash for a rainy day. But with $1.659 trillion in profits in just three months, isn’t it a good time to start hiring again to take the unemployment rate down from it’s current 9.6%?
I had feared that corporations would take advantage of the recession to drive down salaries and hiring. And that appears to be happening, although the business press tends to lump those two phenomenon into the phrase “increasing productivity.”
There is one major problem here, corporations need people with money to keep the 70% of the economy that is based on consumer spending running. The more corporations only see their profits, at the expense of actual markets where people can buy their products, well that’s the rub.
Employment and markets matter. I just fear that a trillion and a half in profits with an unemployment rate of 9.6% or 4.6% might not matter that much to the corporate corner-office crowd. But it makes a huge impact on society as a whole.
I know what you’re thinking. That I’m some kind of socialist. That couldn’t be further from the truth. I’ve got an MBA, I’ve taught at the MBA level and I’m current an executive for a company. It’s just that I take a longer view and think about who is really the foundation for our economy, the people with the paychecks that buy stuff. Whereas many corporate executives that I’ve talked to practice magical thinking where the people who buy stuff are separated from how the economy really functions.
It could be argued that the corporate sphincter muscle needed to be tight. But I can give you 1.659 trillion reasons why the time has come to relax it a bit and start spending some of the cash.
About The Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.
