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