Why Job Growth Remains Sluggish when Corporations are Recording Record Profits

Posted by By at 12 December, at 12 : 33 PM Print

How is that corporate America just reported all-time record quarterly profits and yet job growth continues to crawl?

The answer is not as mysterious as one may think. If you hear the opinions of most employers and small and mid-sized employer groups, the problem comes down to uncertainty.

Any reasonable employer is only willing to move forward with job expansion when there is a reasonably predictable view of what the future holds in terms of economic conditions, benefit costs and the predictability of likely changes in tax regulations and government incentives.

And while Wall Street and mega-corporations may be reaping the rewards of these massive profits, your average mid-sized or small employer continues to worry about sustaining enough business to stay in business. So unless, one happens to run a company that thrives in murkiness and uncertainty, the current just what-direction-is-the-wind-blowing approach to economic policy is not adequately reassuring to the average employer. And how could it be given the times we are in?

Think of this: most middle- and lower-income families right now find themselves in angst over whether they can afford that extra holiday gift, perhaps needing to beg out of exchanging presents with co-workers or anyone outside the immediate family. Just imagine how hard it is for your average small or mid-sized business person to make a commitment to budgeting for new permanent positions when many such employers weren’t sure if they were going to be able to stay in business just a short year or two ago.

Therefore, don’t blame corporate greed this time around. Blame Washington.

The fact of the matter is companies will hire at times when they see clarity in terms of federal tax policy, a supportive environment for business growth, believable government (yeah sure) expressions of confidence in the economy and healthy increases in consumer spending.

Right now, strong positives on all the above are about as prevalent as expressions of happiness in unemployment lines; even if you hear a few encouraging words, they’re about as credible as your average Congressional speech that talks about the need to put politics aside and get down to business. (If only someone in Washington genuinely cared enough about something other than their own careers to mean those words).

So you see, generally speaking, your average employer doesn’t see enough solid indicators to move forward with significant expansions in the workforce. And most of the reason for that comes down to lack of leadership in Washington – on both sides of the political aisle.

Both parties have done a lousy job projecting confidence and certainty and have lost themselves in their own typically small-minded, divisive views of tax policy and finger-pointing about runaway federal spending and the national debt. This country deserves better than Brand A and Brand B, which is about all modern-day Republicans and Democrats have become.

Our country remains great, largely because of the strength of our Constitution, the vision of our founding fathers, and the unparalleled work ethic and unquenchable desire for a better life that lives in the hearts of working Americans.

But the paralysis of politics which pervades every aspect of our nation’s government right now – the administration, Congress, the judiciary, federal agencies – isn’t doing much more than helping provide yet more tireless fodder for the media, especially the talking heads on TV.

Our country will come out of this someday just as Americans found a way to overcome and build an even greater nation after the Great Depression. This time, though, more than ever before, the answers are destined to come from different kinds of leaders in this country – those that don’t make a living working in politics.

In the long run, we’ll find our way out of this economic mess because of the energy and vision of the American people, especially those in American business; don’t be surprised though when boom times return again (probably sometime several years from now) that everyone in elected office will attempt to claim credit for it.

Rock The Capital is obsessed with finding credible and meaningful numbers for such things as cost index, consumer price index or payroll employment, if you are bit wonkish, let us guide you to a place worth your time.

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Phil is a career survivor now helping coach others through their own employment struggles. A recent search executive specialist for Management Recruiters International, he has an eclectic background. He worked in journalism, then later as a public relations manager for Merck and GlaxoSmithKline, a vice president for leading PR agencies, and a director of communications in both the NJ Senate and for the NJ State Bar. He now splits his time between his work as a career coach with business credit counseling. Phil writes creatively and is the author of a published murder mystery and two unpublished screenplays. He is also a big fan of absurdist theater, which is why he loves to write about Congress. These days Phil often mixes searches for fossils of dinosaurs with quests for our most endangered species: the middle class. He recently thought he found a middle class property paid off in full only to learn the modest carriage home housed rottweilers raised by one of Wall Street's leading hedge fund managers. - Email Philip Gimson

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