Investors Expect Profits, But Unemployment Remains High. But? Because!


Re: Investors Expect Strong Profits (Christine Hauser, New York Times, July 12, 2010, Business Section, B1.

Investors expect good profits, but employment lags, the story says. “But?” Maybe “”because?”

“…the rebound in corporate profits has not translated into a rebound in jobs. Many companies have cut costs and increased productivity,” the story reads. Exactly. What kind of unconscious repression of logical thought is involved not to recognize that the cutting of costs and increase in productivity comes precisely from laying off workers and speeding up the work of those that remain (increasing productivity)? Labor costs are a major component of cots, reduce them and you increase profits, strategic  layoffs are good for business’ bottom line, they make stock prices go up. And employment go down. Investors know that, even if journalists leave it unrecognized.

Listen to Louis Uchitelle, of the New York Times, who has it right:

The recession camouflages a far
more insidious and long-lasting corporate strategy:
Instead of temporary pay cuts to get through a few
tough months, major corporations have something very,
very different in mind.

As NY Times economics reporter and The Disposable
American author Louis Uchitelle wrote on Sunday, major
firms are on the verge of consolidating a long-sought
goal with a two-tier wage system:

    The managers of some marquee companies are aiming
    to make this concession permanent. If they are
    successful, their contracts could become blueprints
    for other companies in other cities, extending a
    wage system that would be a startling retreat for
    labor.

    Though union officials said they could not readily
    supply data on the practice, managers have been
    trying to achieve this for 30 years, with limited
    results.
Firms See Long-Sought Goal in Sight: Major Pay Cuts

by Roger Bybee
In These Times
November 24, 2010
http://www.inthesetimes.com/working/entry/6694/

Even the editorial page writer of the New York Times understands it:

“Of late [sic!], profits and related stock-market gains have been fueled not by increased revenues but by lay[offs and other cults.s.” New York Times, January 19, 2011, p. A20.

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