According to an analysis in the Wall Street Journal, members of the Standard & Poor’s 500 — the largest publicly held companies in the U.S. — have returned to their pre-recession levels of sales and profits. However, that is not translating into more American jobs jobs:
An analysis by The Wall Street Journal of corporate financial reports finds that cumulative sales, profits and employment last year among members of the Standard & Poor’s 500-stock index exceeded the totals of 2007, before the recession and financial crisis.
Deep cost cutting during the downturn and caution during the recovery put the companies on firmer financial footing, helping them to outperform the rest of the economy and gather a greater share of the nation’s income. The rebound is reflected in the stock market, with the Dow Jones Industrial Average at a four-year high.
“U.S. companies became leaner, meaner and hungrier,” said Sung Won Sohn, a former chief economist at Wells Fargo WFC -0.77% & Co.,
The performance hasn’t translated into significant gains in U.S. employment. Many of the 1.1 million jobs the big companies added since 2007 were outside the U.S. So, too, was much of the $1.2 trillion added to corporate treasuries.
In addition to hiring overseas, companies have been squeezing more productivity out of their employees. In fact, “in 2007, the companies generated an average of $378,000 in revenue for every employee on their payrolls,” while last year, “that figure rose to $420,000.”
Meanwhile, corporate taxes have not rebounded like corporate profits, hitting a 40 year low in fiscal year 2011. A new report today found that 26 major corporations have made billions over the last four years while paying no corporate income tax at all. These sorts of numbers once again put the lie to the GOP claim that corporate taxes are stifling American job creation.