Corporate Profits At Record Highs - Unemployment Is Good For Business

The latest figures from the Bureau of Economic Analysis show corporate profits at an all time high without any adjustment for inflation. The 4^th quarter of 2010 showed $1.68 trillion in profits compared to the previous high of $1.65 trillion for the 3^rd quarter of 2006.

An article titled “Corporate Profits At All-Time High As Recovery  Stumbles” by Yeepoka Yeebo March 25, 2011 and posted in The Huffington Post digs into the situation. What is clear is the concept of running lean is being taken to heart.

Running lean means that organizations are staffed at bare minimum levels yet during the uncertain economic times they are squeezing more work than ever out of their current employees. With the job market still dragging and hiring of new employees weak, employees will do more and stay where they are instead of leaving to seek another job. That is where the terms increased productivity comes in by getting the same output out of fewer employees; it is simply a math equation.

According to the article, any productivity lost during the recession has been recovered and companies are not spending cash or other liquid assets, but holding on to them. Does that mean that unemployment has been good for business, in a way yes? The recession allowed companies to make cuts in every area and almost reinvent themselves under the cover of a down business cycle.

These record profits also show how the economy has changed. Housing is still a segment in deep trouble and that was once the indicator of how well the economy was doing. A healthy housing segment meat homes were being build, purchased and other segment fed off the housing industry. What current record profits demonstrate is how profitability has disconnected with what happens in the United States. Companies like General Electric operate on a worldwide scale. Financial companies trade financial instrument on a global basis. If demand for products and services is soft in the United States it could be more than offset by growth in markets like China and India.

At some pint new employees will be need in the United States because there is a breaking point to productivity increases from current staff. The question is will the hiring be permanent, through staffing firms or even in the United States.

We Made Snooki A Star, But Can We Make Anything Else In The USA

 Snooki - Celebrity Made In America 

Not Made In America (Video)

The United States probably leads the world in one area of manufacturing and that is the fabrication of celebrities out of previously unknown individuals. When it comes to manufacturing other items on our soil we have lost considerable steam. We made Snooki, Paris Hilton and Kim Kardashian stars, but can we make a cell phone.

Even Senator John McCain though we made some products in the United States because the company is headquartered here. An article titled “McCain flunks Made in America 101” by Rebecca Stewart March 6, 2011 and published on the CNN website discusses how Senator McCain thought the iPhone and iPad were made in the United States when they are assembled in China. Senator McCain can’t really be faulted to think that two of the hottest products on the planet from a decidedly American company would also be built here.

Of course we still manufacture some products in the United States, but the shift to outsourcing manufacturing to lower cost, lower regulation locales around has devastated the heart of “made in America.” The relaxing of trade laws allowed the labor force to become a worldwide pool and in most cases the lowest cost workers won. Everything can be taken to an extreme and the extreme in this case is we may have outsourced the ability of this nation to support itself by send too many wages elsewhere. People can’t buy much without jobs and everyone can’t work in service, retail or become a reality TV star. There are only so many of The Real Housewives and Jersey Shore television shows to go around, we have plenty of people that can assemble iPads, iPhones and refrigerators.

An article by Gary Reeves titled “Dallas family empties home of foreign-made goods” March 1, 2011 and published on the WFAA website states that in 1950 10% of the goods purchased in the United States were foreign, now over 50% of what Amercans purchase is foreign made. Some have become so jaded as to say if some of these products were built here they would be too expensive. With that thinking the cause is lost because we have given up on ourselves.