While nearly 27 million U.S. workers are either jobless or in need of full-time work, America’s corporations are sitting on record profits that could be used to put people back on the job.
This irony is especially cruel for the 2 million workers who will lose their unemployment benefits by the end of the year because corporate America’s Republican friends in Congress blocked an extension of unemployment insurance benefits (UI) for people who have been jobless for six months or more. (Sign the petition and join online solidarity actions to help long-term unemployed workers–find out more here.
The Commerce Department reported last week that American companies just had their best quarter ever, earning profits at an annual rate of $1.659 trillion in the third quarter. The next-highest annual corporate profits level on record—$1.655 trillion—was in the third quarter of 2006. In fact, American corporate profits have grown for seven straight quarters at some of the fastest rates in history.
Economists says the record profits can be attributed to strong productivity growth—companies making more with fewer people—and to companies spending the money in–and sending jobs to–fast-growing countries such as China and India. As a result of the Federal Reserve’s consistent long-term lowering of interest rates, corporations have rarely had it better, they say.
Consumer spending and the American Recovery Act have fueled what little growth there has been in the U.S. economy, says Heidi Shierholz, an Economic Policy Institute (EPI) economist. One of the key engines growing the economy is extended UI benefits, she said.
Writing in The Huffington Post earlier this month, Shahien Nasiripour says banks are loaded with cash as well. Through September, banks had $981 billion in excess reserves at the 12 regional Federal Reserve banks across the country, Fed data show. In August 2008, right before the financial system nearly imploded, banks had just $1.9 billion in excess reserves.
Read Nasiripour’s article, “Federal Reserve Rains Money On Corporate America— But Main Street Left High And Dry,” here.