“With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers,” writes the New York Times’ Nelson Schwartz.
“Right now, C.E.O.’s are saying, ‘I don’t really need to hire because of the productivity gains of the last few years,’ ” said Robert E. Moritz, chairman of the accounting giant PricewaterhouseCoopers.
United Technologies, an industrial giant based in Hartford that is one of 30 companies in the Dow, underscores why corporate profits and share prices continue to rise in a lackluster economy and a stagnant job market. Simply put, United Technologies does not need as many workers as it once did to churn out higher sales and profits. At 218,300 employees, United Technologies’ work force is virtually unchanged from seven years ago, even though annual revenue soared to $57.7 billion in 2012 from $42.7 billion in 2005. Even though profit and revenue have never been higher; four days after the company’s shares soared past $90 to a record high last month, United Technologies confirmed it would eliminate an additional 3,000 workers this year, on top of 4,000 let go in 2012
As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950. Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008 but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation.
3M, another company among the Dow 30 and based in Minnesota, has grown substantially in recent years, rising to 87,677 last year from 76,239 in 2007. But of those 11,438 positions added, only 608 were in the United States. Julia Coronado, chief North American economist at BNP Paribas explains “You’re investing in the global economy and you’re getting access to stronger growth abroad.”
According to an April 2012 study from the Economic Policy Institute, hourly worker compensation stopped rising with productivity gains right around the mid-1970s. Since then, wages have stagnated even as economic productivity has continued a steady, multi-decade climb. Had the federal minimum wage kept up with productivity since the 1960s, it would be $21.72 per hour instead of just $7.25.
“Right now, C.E.O.’s are saying, ‘I don’t really need to hire because of the productivity gains of the last few years,’ ” said Robert E. Moritz, chairman of the accounting giant PricewaterhouseCoopers.
United Technologies, an industrial giant based in Hartford that is one of 30 companies in the Dow, underscores why corporate profits and share prices continue to rise in a lackluster economy and a stagnant job market. Simply put, United Technologies does not need as many workers as it once did to churn out higher sales and profits. At 218,300 employees, United Technologies’ work force is virtually unchanged from seven years ago, even though annual revenue soared to $57.7 billion in 2012 from $42.7 billion in 2005. Even though profit and revenue have never been higher; four days after the company’s shares soared past $90 to a record high last month, United Technologies confirmed it would eliminate an additional 3,000 workers this year, on top of 4,000 let go in 2012
As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950. Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008 but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation.
3M, another company among the Dow 30 and based in Minnesota, has grown substantially in recent years, rising to 87,677 last year from 76,239 in 2007. But of those 11,438 positions added, only 608 were in the United States. Julia Coronado, chief North American economist at BNP Paribas explains “You’re investing in the global economy and you’re getting access to stronger growth abroad.”
According to an April 2012 study from the Economic Policy Institute, hourly worker compensation stopped rising with productivity gains right around the mid-1970s. Since then, wages have stagnated even as economic productivity has continued a steady, multi-decade climb. Had the federal minimum wage kept up with productivity since the 1960s, it would be $21.72 per hour instead of just $7.25.
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