Something very strange is happening in corporate America.
In corporate America, business is booming, and the rich are getting richer. But in the America we know, unemployment is still bad, and is holding steadily in the double digits in many parts of the country. People still need jobs, more than ever.
How can these two Americas both exist at the same time? How can we reconcile growing profits with no new jobs? "The problem," writes Harold Meyerson, isn't merely the massive economic downturn:
It's also that big business has found a way to make big money without restoring the jobs it cut the past two years, or increasing its investments or even its sales, at least domestically.How can this be? What, have businesses turned into a bunch of amateur magicians or something? Are they pulling money from hats and pockets and sleeves? Nope, says Meyerson. It's even easier than that:
Great. So basically, companies are going overseas for work and refusing to invest in their companies here at home. Meanwhile, they rake in the profits while ordinary Americans continue to experience record and long-term unemployment due to the vast shutdown of the private sector job market. As the Washington Independent reports:
Ever adaptive, they have evolved a business model that enables them to make money even while the strapped American consumer has cut back on purchasing. For one thing, they are increasingly selling and producing overseas. General Motors is going like gangbusters in China, where it now sells more cars than it does in the United States. In China, GM employs 32,000 assembly-line workers; that's just 20,000 fewer than the number of such workers it has in the States. And those American workers aren't making what they used to; new hires get $14 an hour, roughly half of what veterans pull down.
The GM model typifies that of post-crash American business: massive layoffs, productivity increases, wage reductions (due in part to the weakness of unions), and reduced sales at home; increased hiring and booming sales abroad. Another part of that model is cash retention. A Federal Reserve report last month estimated that American corporations are sitting on a record $1.8 trillion in cash reserves. As a share of corporate assets, that's the highest level since 1964.
There are more than 30 million people left without work at some point during the course of the recession; 14.6 million are currently unemployed. As many as 4 million people have exhausted the maximum weeks of federal and state unemployment benefits.But companies don't care. They no longer seem to feel the slightest obligation--to workers, to families, to communities. The last vestiges of the mantra of shared responsibility, of investment in America, seems to have vanished along with our pensions and our 401ks. Look at the workers at the Mott's factory in Williamsburg, NY, forced on strike because their highly profitable employers decided to take advantage of the recession to try to cut workers' benefits and wages, and freeze their pensions.
But the Republicans who want to blame the unemployed for their unemployment, who tried to deny them an extension of jobless benefits, who keep pushing corporate tax breaks for companies already flush with cash--these members of Congress might be in trouble come this fall. The unemployed are starting to organize, to get involved politically, to become a force and to make their voices heard. And what they have to say might send a loud and clear message to corporate America about how much greed we'll tolerate in this country: not a lot, and not for long.