Revenue Falls but Profits Soar–Addendum

Andrew Sum, economics professor and director of the Center for Labor Market Studies at Northeastern University, concluded in his analysis of recent recession data “the carnage that occurred in the workplace as out of proportion to the economic hit that corporations were taking.”  A recent New York Times article by Bob Herbert reports key findings of Professor Sum’s research.  In speaking to the recent period of economic recovery Professor Sum said, we have seen “the most lopsided gains in corporate profits relative to real wages and salaries in our history.”

As we previously noted the intention of many corporate executives is to squeeze labor more and more in order to realize greater and greater profit.  As Sum notes “they threw out far more workers and hours than they lost output.”  A quote in The New York Times from Charles D. McLane Jr., CFO Alcoa, pretty much explains it: “we have a tight focus on spending as market activity increases, operating more effectively and minimizing rehires where possible…we’re not only holding headcount levels, but are also driving restructuring this quarter that will result in further reductions.”  Yes further reductions beyond the 37,000 workers Alcoa let go since late 2008!  Professor Sum said “I’ve never seen anything like this…Not only did they throw all these people off the payrolls, they also cut back on the hours of the people who stayed on the job.”

Even to the casual observe it should be clear that our business management practices are very much out of step with our very human, as well as our societal, needs.  Treating people as exploitable objects in the economic equation where the outcome is profit is plain and simple inhumane—a crime against humanity.  As stated in It’s the EconoMe, Stupid:

To perpetuate current reality is to cast humankind aside for the allure of transitory material gain—for the sake of a few bucks. To be responsible beings, we must no longer put material worth ahead of human value.

The evidence couldn’t be clearer: Isn’t it time for business of a different mind?

5 thoughts on “Revenue Falls but Profits Soar–Addendum

  1. Thanks Greg! Another interesting statement in the NY Times article “Increases in the productivity of American workers are supposed to go hand in hand with improvements in their standard of living. That’s how capitalism is supposed to work. That’s how the economic pie expands, and we’re all supposed to have a fair share of that expansion. Corporations have now said the hell with that.”

    Just another proof that these are indeed unusual times!

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