Corporate profits have recovered, but job market still
depressed
Lawrence Mishel
July 14, 2010 - EPI
As corporations begin reporting second quarter earnings this week, they will
paint a picture of robust recovery that starkly contrasts with the stalled job
market. Indeed, corporate profits had already made up all of the ground lost in
the recession, and then some, by the first quarter of this year. The countryfs
labor market, however, still has far fewer jobs than it did at the start of the
recession in December 2007. The Chart shows trends in both
corporate profits (both privately and publicly-owned) and employment since the
start of the recession. The chart indexes both to 100 at the start of the
recession so the lines indicate how far profits and employment have recovered.
Although corporate profits suffered in the early part of the recession, they
have been steadily growing for more than a year and are now 5.7% greater than
they were at the start of the recession.
Total profits of U.S. corporations, as compiled by the Commerce Departmentfs
Bureau of Economic Analysis, were at $1.50 trillion in the fourth quarter of
2007 and reached $1.59 trillion in the first quarter of 2010. Over that same
period, the country lost 8.2 million jobs, or 5.9% of the job base. In other
words, about one out of 20 jobs has simply disappeared. While job growth has
resumed in recent months, the pace of job creation remains glacial, and as the
chart shows, not nearly sufficient to recoup the losses suffered any time
soon. Corporations have been able to restore their profitability in the
midst of the worst economy in generations even though sales levels are still
below those before the recession began. When employers are able to recover
their profits many years before their employees can even hope to attain the
income and employment levels they had prior to recessionfs devastation,
economic policy is clearly skewed in favor of corporations and not
workers.
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