U.S. Corporate Profits Reach New High, But Unemployment Rate Refuses to Budge
Taking stock of the haves and have-nots at Thanksgiving 2010.
Nov. 24, 2010— -- While Wall Street was celebrating good news about corporate profits this week, millions of Americans will sit down at Thanksgiving Dinner tables the same way they did last year -- without jobs.
Unemployment remains stuck at a stubborn nine percent, but corporate profits broke records in the third quarter of this year, surpassing $1.6 trillion. That's the highest profit level ever, not adjusted for inflation.
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With the whiff of mega-million dollar bonuses in the autumn air, some top executives are celebrating lavishly, just as they did before the recession. Expensive restaurants are pulling in crowds again, and Sotheby's auction house says bids for its expensive paintings and wares are "pouring in."
Then there's Fred Clark, who was laid off from his job as a logistics manager for United Technologies a few days after Thanksgiving 2008. He had worked at the company for 19 years. Two years later, he's still unemployed.
"I hope to get a job" in 2011, Clark said today. "I have to believe that."
Recession's Effects Still Being Felt
But for Clark and millions of other out-of-work Americans, it's hard to stay optimistic. Though the government says the recession is officially over, long-term joblessness remains high and income disparity, what the richest Americans make compared to everyone else, is as great as it has ever been.
"That's what we've been told since JFK, that a rising tide lifts all boats," said Jacob Hacker, a professor of political science at Yale University. "But in this current economic period, it looks more like a rising tide only lifts yachts."
Fred Clark's old company, United Technologies, just had a great third quarter. It posted $1.2 billion in profits, up 13 percent from a year ago. The company has $5.7 billion in cash, more than a billion more than it did last year.
"Corporate America is sitting on piles of cash and not hiring, basically because it's concerned about the future," said Hacker. "It's concerned about whether or not there's going to be sustained consumer demand."
Corporations Stockpile Cash Instead of Hiring
The cycle is vicious -- with less spending, there are fewer new job opportunities, fewer people working, and less consumer demand. The effects are resonating throughout the country. In Atlanta, an organization called Hosea Feed the Hungry and Homeless served meals to some 8,000 people last year. This year, it expects to serve twice as many.
But as Fred Clark prepares to join his family for Thanksgiving dinner tomorrow, he says he still has plenty for which to be thankful.
"You know, right now, I have a roof over my head, I've got my family, and you know, that's what you need," Clark said.