Corporate Profits and Unemployment

So often we hear a message that we would be able to create more jobs if only we taxed corporations less. We hear there are too many regulations that are stopping businesses from expanding, and that government needs to "get out of the way" so businesses can grow. Then these businesses will provide these missing jobs that we have been waiting for.

So let's take a look at corporate profits compared with the unemployment rate...

 

As you can see, corporate profits are better than before the recession started. They are doing fantastic after all taxes have been paid. They have more money now to do things like HIRE PEOPLE than they did before the recession started. Even with all the regulations and taxes they are more cash rich than ever!

So why aren't they investing in America? 

I would offer that they would rather drain cash from America by hiring cheap labor elsewhere, and then sell as much as possible to the American people as possible, including extending cheap credit. The problem is that this strategy is working so well that Americans are running out of cash reserves and credit, and obviously demand is down. Demand is down because there are fewer jobs, and thost that remain pay on average less than when the recession started.

How do we fix it?

We create demand by investing in infrastructure. Don't pay corporations to do it for us. Hire the workers directly through the US government, and give corporations competition which they haven't had in quite some time. Make them pay more for workers, not less. And start building better roads, bridges, broadband, a superior power grid, better public transportation, parks, public buildings, etc. This is exactly what China has been doing, and they are struggling to STOP growing so fast.

As people earn higher wages, they can afford more, and they also feed the economy. If we keep cutting, we are just pulling more money out of the ecomomy at the same time corporations are doing the same (yet draining cash and credit reserves).