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Corporate Profits at All-Time High. Unemployment at 9%. What does this Mean?

Last updated by on 8 Comments

Profits Up. Unemployment Rate? Still Up.

Corporate profits in Q3 of 2010 reached an all-time high at an annually adjusted rate of $1.659 trillion. Try telling that to the unemployed.

The U.S. unemployment rate was at 9.0% in the month of October of this year. This is down from a recent high of 10.6% in January of this year, but still significantly higher than the lowest point in the last decade – October of 2006.

Why is October of 2006 a significant month?

It was the month following the last time we saw corporate profits at this level – $1.655 trillion in Q3 of 2006, to be exact.

What was the unemployment rate in October of 2006?


If you’re unemployed and that does not scare you, I don’t know what will.

corporate profits

Productivity at Work

In my ‘Americans are Overworked‘ post, I talked a lot about productivity gains. Specifically,

Using data by the U.S. BLS, the average productivity per American worker has increased 400% since 1950. One way to look at that is that it should only take one-quarter the work hours, or 11 hours per week, to afford the same standard of living as a worker in 1950 (or our standard of living should be 4 times higher). Is that the case? Obviously not. Someone is profiting, it’s just not the average American worker.

The obvious that I didn’t state was that the ‘someone’ is corporations.

You can’t blame them. By nature, corporate America is designed to make money as efficiently as possible. If they can shed a full 5% of the workforce and still squeeze the same amount of money out of what is left, why wouldn’t they? Capitalism at work, baby. Given the choice to make as much money with fewer expenses, would you not choose the same if you were running your own business?

Why is this so Scary for the Unemployed?

Getting back to previous levels of profitability has proven not to be enough incentive for corporate America to bring on enough new workers to significantly impact the unemployment rate. For that to happen, the U.S. would have to see unexpectedly explosive growth. And that doesn’t appear to be happening any time in the near future.

If you were sitting around thinking it was only a matter of time before the economy improved and employers would start flooding you with offers, think again.

This is further sign that you’re going to have to be scrappier than ever to find or create new opportunities for yourself. And it might take a little re-inventing in the process.

What’s your take?

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I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Wizard Prang says:

    Back in the 1950s there were fewer people and hardly any two-income families. There were also a whole lot more industries that made stuff, and manufacturing was more labor-intensive. For the most part, Mom stayed home and raised the kids while Dad went to work. This means a large number of employers chasing a small number of people.

    Fast-forward to the 21st century. A large population. Loss of domestic manufacturing capacity and heavy industry. Mechanization. Globalization. A large proportion of families are now two-income. All of these factors conspire to create a large number of people chasing a smaller number of jobs. The massive amount of illegal immigration — and the Government’s unwillingness to tackle this problem – does not exactly help, either.

    So employers can afford to be fussy. And cheap.

    The bottom line: Supply and demand, baby, supply and demand.

  • Honey says:

    This is at the heart of the Marxist critique of capitalism. Since the cost of goods is (more or less) fixed, the only possible place for profits to come from is by underpaying your workers. Not saying we should go 100% socialist, but capitalism is clearly failing huge swaths of the population.

  • Bird says:

    Don’t put too much stock into the headline. It’s one quarter, not inflation adjusted, and the rest of the world is in a faster recovery contributing more to our profits. Growing (normal) economies are going to consistently set all time highs in corporate profits.

  • bh says:

    This also shows the heft of burden placed on small businesses. If corporations continue to maximize profits with reduced workforce, many small businesses are forced to increase their size to compete. Cost of doing biz in America for SMB is getting prohibitive & they continue to feel the credit exclusion squeeze.

    Why does America continually vote to keep corporations in charge? They continually prove their concern with bottom line and nothing else.

  • Brandy says:

    You said that our standard of living should be 4 times of the standard of living from 1950’s. I have to say that mine is! And most people I know are much better off then their grandparents were in 1950. My friends have their own cars and places to live with central heat and ac. We all have jobs where we sit on our butts all day long instead of working on the farm or doing some other sort of manual labor. We all have cell phones and computers and can communicate and learn information quickly. I would definetly say our standard of living is 10 times greater!

  • Jonathan says:


    While that can be stated for a lot of people, the same cannot be said for the majority of people in the world. The true measure of a society’s success and well being is how it cares for it’s poor, it’s homeless, it’s hungry. For this, I disagree with you. Hunger levels have slowly gone down since the 50s, but in recent years, that number has gone back up to challenge these numbers. Current estimates are sitting at around 925 million people worldwide who are undernourished.

  • Infinite Banking says:

    You can’t blame corporations for being smart. They hire people when they can afford to hire people. Hiring comes AFTER profits not BEFORE. So hopefully this will bode will for the unemployed.

  • Mike says:

    If you are useful you will get hired by someone. If you’re unemployed, you are mostly responsible for it. Sorry.


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