In a column on his website, RobertReich.org, former Secretary of Labor in the Clinton Administration and current professor at UC-Berkeley Robert Reich writes about why corporate profits have nothing to do with job growth. The one point he made that jumped out at me was the following:
“Corporations are using their pile of money to pay dividends to their shareholders and buy back their own stock - thereby pushing up share prices.”
This is something I have noticed for years. I always wondered why companies that reported consistent quarterly profits from 2004-2007 always tended to have more downsizing periods than hiring periods. They're boosting the income of their higher end shareholders at the expense of their much lower-end employees that have to scrape by to make ends meet in this job market of exploited employees.
This has always been my personal argument against the Bush Tax Cuts as well. I have no problem with wealthy individuals getting a tax break so long as they’re creating jobs with those tax breaks. If a job is being created, let them get the tax credit for it. I still don’t get the argument that tax cuts spur job growth and tax revenue through the actions of that multi-millionaire takes the extra $50,000 or $60,000 in his pocket each year and buys his 2nd or 3rd yacht with it rather than hire a new employee for $30,000 a year.
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