Posted by Leonard Steinberg on March 4th, 2013

Corporate profits have grown strongly over the past few years, yet job growth has not. We are in a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.   These factors, along with the Federal Reserve’s efforts to keep interest rates ultralow and encourage investors to put more money into riskier assets, prompted traders to send the Dow past 14,000 to within 75 points of a record high last week. So everyone keeps asking why no great job growth? DUH! Corporations have become more efficient, utilizing technologies to replace human beings. I call it the HOME DEPOT FACTOR…..I am certain you have noticed how 10 self-checkout machines replaced what was once 10 human beings (often with really bad attitude)…..So those 10 Home Depot workers who lost their jobs to machines are aided by government…..with our tax dollars. They consume, but they consume far less. They cannot buy a home unemployed…..so they canot go shopping at Home Depot to buy anything for home repairs either.  This same thinking is being applied across the board to make companies more effective and efficient. Government is doing the same with the size of government which is the smallest its been in 20 years.

If no laws are enacted to entice corporations to hire, they simply won’t. Corporations do to not have to bear the bulk of the costs of our welfare system that provides for the unemployed. Is this short-sighted? Surely it would be in the interests of large corporations to hire, thereby increasing the consumer base…..surely higher consumption would be better for profits? The recession forced companies to trim and become lean and mean in their operations….now that those companies are lean and mean, why hire more people if fewer people can do the same work and the result is even higher profits?

So what is holding companies back from hiring? Medical costs? Unrealistic union demands? Lack of consumer demand? If it is the latter, then hiring would be the logical solution: hire more people, create more consumers. In a world where little or nothing makes sense anymore, logic is becoming useless….