Profit per employee up....why not wages?

Companies are squeezing greater profits out of their employees, even as layoffs rise and the outlook for hiring and raises remains mixed, a recent study has found.

Profits per employee have gone up for the second year in a row, according to a study by the financial analysis company Sageworks, suggesting that companies continue to get more out of their employees as they slash their payrolls in an effort to get leaner. The findings also suggest that profits have been rising despite the lack of a corresponding increase in wages.

The private companies surveyed by Sageworks reported that their profits per employee climbed to $15,278.72 in 2011 from $12,488.02 in 2010, a rise of about 22 percent for the year. The figures for 2010, in turn, represented an increase of about 24 percent from the 2009 profits per employee, which were $10,045.56.

The rise in profits per employee indicates that companies are finding ways to maximize the efforts of their workers. Layoffs climbed to a 16-month high in July, according to an analysis by the firm Challenger, Gray & Christmas, and employers have eliminated 312,220 jobs so far this year.

With numbers like this, why would we think that lowering taxes on corporations will help create jobs? or even keeping low taxes on those making over $250k will increase jobs?

On the other hand, the rising profits per employee figures could also bode ill for hiring, as Sageworks notes in its recent analysis. With companies continuing to get higher profits out of their employees, they may not have an incentive to hire more workers until the economy improves.

http://www.huffingtonpost.com/2011/08/2 ... 35646.html

This would indicate that maybe we need more stimulous to the economy itself, not lower taxes for corporations or the wealthy, to stimulate job growth.

And how do you propose to stimulate the economy itself, have government borrow and spend more money so that we reach the new debt limit faster than originally planned?

I also noted the ambiguous use of the term "profit" without qualifying it. Is that gross profit? Net profit? Pre-tax profit? Post-tax profit?

Sorry archer, but even you have to agree that Huffpo is agenda driven. One can't begin to take anything found there at face value - unless of course one is only looking to have their own agenda ideas reinforced.

PrintSmith wrote: And how do you propose to stimulate the economy itself, have government borrow and spend more money so that we reach the new debt limit faster than originally planned?

I also noted the ambiguous use of the term "profit" without qualifying it. Is that gross profit? Net profit? Pre-tax profit? Post-tax profit?

Sorry archer, but even you have to agree that Huffpo is agenda driven. One can't begin to take anything found there at face value - unless of course one is only looking to have their own agenda ideas reinforced.

No more so than Fox News.....are you saying the Huffington made this all up? I don't think so. But it's easier to say it's a liberal bias than it is to address the issue. Corporations are making better profits on fewer employees and there is no reason for them to hire more employees even if you do give them a tax break.....they will just make even bigger profits.

Some ways we can invest in the economy itself? Infrastructure, education, unemployment insurance, anything that will put more money into the hands of those who spend the most and drive our economy. Healthcare.....taking the enormous burden off small businesses and the self-employed. Redesign and maintenace of our energy grid/electrical grid........If we wait on corporations to save us, we're going down. Pure and simple. They don't have any reason to hire more workers.......and giving them tax breaks isn't going to do it, they just pocket the money and give it to their investors as dividends. Great.....that still doesn't create jobs or put money into the hands of the middle class that drives our economy.

All the money for infrastructure is being used to fund public charity at the moment archer. That is how the maintenance and replacement schedule for the nation's infrastructure got messed up to begin with. Where, oh where, do you plan on getting this money? Are you going to increase the current tax burden by 50% or are you planning on borrowing that money and driving up the deficit at an accelerated pace to obtain it? I left out the other choice, significantly reducing the self labeled "mandatory" portions of the budget because that isn't an option for the regular readers of Huffpo.

We're already investing in education so heavily that the cost of a college degree is beyond the means of most middle class families. Prior to the Carter creation of a cabinet level department, a middle class family could actually afford to send their child to college, even a prestigious one. Once the federal government got involved, however, that quickly changed and now the cost of a college education is growing more than the cost of healthcare is on an annual basis. Perhaps if we stopped trying to collect money from everyone and redistribute it, the colleges and universities might actually have to price their product at an affordable level.

Your reference to Healthcare was a bit vague, but I don't think you were advocating for a reduction in the regulations which mandate a whole laundry list of policy inclusions that both drive up the cost of health insurance since they essentially change the insurance into prepaid health care plans and the cost of the care itself by divorcing the consumer from the actual cost of the care they seek. Feel free to correct me if I am mistaken here.

How are you going to put the money you think should be spent in the hands of those who you think spend the most? Are you going to reduce their taxes? Likely not since the regular readers of Huffpo are constantly reminding us that tax cuts don't pay for themselves. Are you going to advocate the folks in DC put together another SwindleUs bill to fund the projects that will hopefully be more shovel ready than the last batch were? Or are you advocating for a more FDR like approach of employing the unemployed directly for federal projects and having them leave their homes to where the project is and sending 80% of the money back to their family.

Platitudes are nice, but they don't get the job done archer. More than a utopian vision is needed at the moment.

Profits up but not wages? Why? Because the free market doesn't work that way.
If 30% of the current workers retired and/or went to another country, then business would have to raise wages to keep themselves fully staffed but with at least eight applicants for every job, no reason to increase labor production costs.

Some businesses do increase bonuses when business is good and the company I work for does that. Last year we got a 7% bonus because of record earnings.
That way you do reward your employees for better profits but don't have to keep paying it every year like a 7% wage hike.

SS109 wrote: Profits up but not wages? Why? Because the free market doesn't work that way.
If 30% of the current workers retired and/or went to another country, then business would have to raise wages to keep themselves fully staffed but with at least eight applicants for every job, no reason to increase labor production costs.

Some businesses do increase bonuses when business is good and the company I work for does that. Last year we got a 7% bonus because of record earnings.
That way you do reward your employees for better profits but don't have to keep paying it every year like a 7% wage hike.

Exactly my point....there is no incentive for companies to hire, or increase wages, even if you give them a tax break. It will just mean more profit for them. Until the economy turns around and demand goes up for more products, employment will remain stagnant. So touting lower corporate tax rates will not help the unemployment problem.

I am actually glad Archer posted this. I doubt I could ever explain wages, profits and corporate taxes to you archer.

Using your logic, everyone should see their pay decrease every year that corporate profits decrease by any amount.

Investors get profits and losses
Employees get a competitive fair market wage for their skills, with extra for individual performance.

If you get profit sharing pay, your pay does decrease. Just a thought.

Thats true LH, and I never liked that idea. I worked at a company that gave out a zillion worthless options, most employees said give me cash instead. Its a scam for most.

Investors get profits and losses
Employees get a fair market wage for their skills, with extra for individual performance.

Ding Ding Ding Ding!

We have a winner!