In “Economic Recovery Turns 2: You Feel Better Yet,” (Paul Wiseman, VA Pilot 7/5/2011), the author quotes many facts to make the same old progressive talking point: because corporate profits are up 59% (since 2009) and CEO pay is up 25% (since 2009), “evil” [my word] corporations, the CEOs who run them, and stockholders are doing well, but the average employee, whose wages are down 1.6% (since 2010) is not. Translation: “evil” corporations are not meeting their social obligation to hire people or pay them a fair wage.
First, profits are not necessarily a bell-wether of the state of the economy. Most companies on the stock exchange are large corporations (20% of all companies in the US) and are generally multi-national. A large portion of their operations are outside the United States. A better measure of corporate health is gross revenues, generated by business units within the United States.
Second, most new job creation is from small and mid-sized businesses (80% of all companies in the United States). The revenue (and profits) within this segment have been and are currently stagnant.
Third, and most important – listen carefully – the purpose of a company is not to create jobs and hire people (wages). Its purpose is to produce a product or service as efficiently as possible (productivity), thereby generating profit. So, if my small business can produce a high-quality, low-cost, high-demand product or service, without one employee, that is what it will do. Wages are set by local / global market forces. If government wants companies to employ more people, it should encourage a business environment in which companies thrive and employing more workers is economically attractive: an environment of limited but appropriate regulations, low taxes, and a fair legal system.
Government never has nor ever will create wealth: productive people -- free of government regulation and taxation -- do that.
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