Tuesday, May 8, 2012

HUGE Republican Myth Exploded: Corporate Profits at Record Highs ≠ Job Growth

Corporate Profits in 2011 Close to $1 Trillion
This is strange, because unemployment is still really high and Obama is supposed to be the worst president for business in history. But according to Daily Finance:

"The Fortune 500 generated a total of 824.5 billion in earnings (profits) last year, up 16.4% over 2010. That beats the previous record of $785 billion, set in 2006 during a roaring economy."

Hmmm. That's Odd. If Obama is the worst president for business in history what with all his anti-business rhetoric and job-stifling regulations, the data should indicate that, right? Corporate profits should not be at record highs. But the data don't support this contention. It is, in a word, illogical. So, if America's top corporations made almost $1 trillion in profits in 2011, why don't we have much lower unemployment? Because lower taxes=more cash for corporations ≠ more jobs. 

Corporate taxes are lower than they've been in 40 years and are making record profits because of it. But we're still at over 8% unemployment in spite of the fact that the biggest corporations are sitting on record amounts of cash. But where is that money going? Well, over the last 30 years, CEO pay actually increased 127 times relative to average inflation adjusted wages.  

Trickle down doesn't create jobs,
but it does stink. (Source)
Big Republican Myth Exploded: Trickle Down Works to Create Jobs. The thing about no or low taxes for corporations? Corporations simply sit on the extra money, and that's what they're doing now. Apple is a great example. That wildly successful company has $100 billion in cash. So, they're creating more jobs here in the US with it, right? Wrong. They're using it to provide dividends to their shareholders!.  That could equal jobs, sure, for, um, stock brokers and the people who cut the lawns of Apple stock owners. 

The republican idea that corporations use extra cash to create jobs is simply a myth--a collectively agreed to lie on a grand scale.  

Lower Taxes Has Never Led to More Jobs. At a time when the effective corporate tax rate is the lowest it's been since the 1970s, corporations are making more money, but this isn't translating into lower unemployment. Same thing with lower taxes on the wealthiest--they don't create jobs, they invest it to become even wealthier. This has never worked to create jobs. That's trickle down myth that has no basis in reality. In fact, the wages of those at the top have increased substantially while wages for average workers have declined, as Think Progress's Pat Garofalo explains:

"[The] return to pre-recession level earnings hasn’t translated into job or wage growth for America’s workers. In fact, inflation-adjusted wages fell last year. Big companies are also squeezing more productivity out of their workers, with annual revenue generated per worker increasing by more than $40,000 over the last five years. CEO pay, meanwhile, increased 15 percent last year."

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