Corporate profits hit record highs, so where are the jobs?
American corporations saw record-high profits between June and September, according to new government data.
Corporate earnings hit $1.75 trillion for the third quarter, up nearly 19% from a year ago.
The big winners? Financial corporations, the ones flush with cash only a handful of years after taking big bailouts.
So, once again big business comfortably prospers while wages for the rest of us remain stagnant and the unemployment rate holds stubbornly high.
"That's how it works," Robert Brusca, an economist with FAO Research in New York, told CNNMoney. When profits increase, labor costs tend to decline, he says.
In the case of the recovery, profits have exploded, while our take-home pay has barely budged.
A recent study by economists from Northeastern University in Boston determined that when the economy first started recovering from recession in 2009, "corporate profits captured 88% of the growth of real national income, while aggregate wages and salaries accounted for only slightly more than 1%."
And yet the GOP spent much of the last four years claiming the Obama administration pushed an anticorporation, socialist agenda.
If that were the case, would these companies be hoarding profits?
No, they would be forced to invest these profits into jobs and increased wages for Americans.
In other words, they would become the "job creators" Republicans claim these businesses to be.
I know that that the unemployment rate fell to 7.7% in November, a four-year low despite Hurricane Sandy and the closure of Hostess Brands Inc., which threw the Twinkie maker's 18,500 workers out of work.
But the latest Labor Department report issued on Friday says payrolls only expanded by 146,000 jobs, and that just isn't good enough.
It seems we're waiting for Adam Smith’s "invisible hand" — that phenomenon whereby efforts to maximize profits eventually benefit society — to reach out to the rest of us.
The graph below from the Federal Reserve Bank of St. Louis shows how post-tax corporate profits cratered during the recession and fell just one quarter since. The rest of the recovery shows a sharp increase.
And so the question remains, where's ours?
The data do not support Republican claims that this recovery has not been kind to corporations.
On the contrary, the profits show Wall Street continues to flourish under the Obama administration.
Can’t they just move on from that cry?
Jill Beccaris-Pescatore is an assistant professor of economics at Montgomery County Community College in Blue Bell, Pa.