December 11, 2010
BECAUSE JOBS AREN'T ABOUT DOING WORK, JUST ABOUT BEING PAID:
The rich rewards of cutting jobs (Joan Vennochi, December 9, 2010, Boston Globe)
PROFITS ARE up, so it’s time to slash the workforce.That’s the story at State Street Corp., which recently announced the elimination of 1,400 jobs, including 400 in Massachusetts. Those jobs are gone, even though State Street last reported profits of $427 million, up about 20 percent from a year ago. Operating revenue also rose 8.4 percent .
In an internal e-mail, chief executive Jay Hooley explained the strategy as necessary to “enhance service excellence and innovation’’ and drive “a stronger sense of urgency about getting things done.’’
Those scary words reflect the new normal in corporate America.
Since the US economy entered into recession at the end of 2007, jobs have been shed and wages frozen or cut. But, while wage and salary payments to workers declined by $121 billion or about 2 percent since the last quarter of 2008, pre-tax corporate profits rose sharply — up by $572 billion or 57 percent over the same time period, according to Andrew Sum, a professor of economics and director for the Center for Labor Market Studies at Northeastern University. Productivity also increased, but workers got no reward — only unemployment insurance.
“The extraordinary corporate profit share of income growth in the current recovery has no historical counterpart,’’ write Sum and research associate Joseph McLaughlin, in the current edition of Challenge Magazine. As a result, they note, “America’s workers might with justification claim, ‘We wuz robbed.’ ’’
Once you accept that reducing the workforce does not reduce output, just wages, then you can begin to discuss employment reasonably. In America today, we aren't talking about employment as a matter of productive labor but as a means of wealth redistribution.
But, as a matter of economics, isn't it better to run companies efficiently and if we think people ought to be paid to do nothing just have the state pay them?
