"Industries Find Surging Profits in Deeper Cuts" NY Times 7/25/2010

Excerpts:

This seeming contradiction — falling sales and rising profits — is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing.

Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production.

“Because of high unemployment, management is using its leverage to get more hours out of workers,” said Robert C. Pozen, a senior lecturer at Harvard Business School and the former president of Fidelity Investments.

“There’s no question that there is an income shift going on in the economy,” Mr. Harris added. “Companies are squeezing their labor costs to build profits.”

Jobs Returning - but good ones not so much Yahoo! Blog "The Lookout," March 9, 2010.

Excerpt:

a recent Wall Street Journal analysis found that even though productivity rose 5.2 percent from mid 2009 to the end of 2010, wages increased by just 0.3 percent. That means only 6 percent of productivity gains were shared with workers. In past recoveries, that figure has averaged 58 percent. This time around, far more of the gains went to shareholders, in the form of profits, which are at record levels.

Public and Private Sector Compensation Stagnate As Productivity Rises

Excerpt:

As it shows, from 1989 to 2010 both public-sector and private-sector compensation has seen comparably modest growth: up 20.5% in the state/local sector, up 17.9% in the private sector. In contrast, hourly productivity grew 62.5% over the 1989-2010 period, more than three times as fast as compensation grew in either the public or the private sector. There has been much discussion of whether public-sector workers earn more or less than private-sector workers. The reality is that public-sector workers make somewhat less if one compares those with comparable education. As the Figure shows, however, the more important issue is the fact that workers in neither sector have seen their pay grow in tandem with the increase in the economic output that has been produced, a reflection of the continuing erosion of good jobs and the downward pressure on wages from globalization, deunionization, an eroded minimum wage, high unemployment, and other factors.