Jobless Recovery

As Companies Grow, Jobs Shrink

Joblessness may be on the rise, but that isn't holding back big business. Companies are reporting record profits due to massive growth overseas, namely China and other Asian markets. Greg Haynes, chief financial officer at United Technologies Corp, outlined the bittersweet scenario. "We've driven all this cost out. Sales have come back, but people have not," he said. "It's the structural cost reductions that we have done over the past few years that have allowed us to see strong bottom-line results." 78 percent of companies in the S&P 500 index have reported second quarter earnings that exceeded Wall Street expectations. The slashes in cost and tight financial regulation adopted by most businesses has helped create a "two-speed U.S. recovery," but fewer jobs were added in June than any time in the past nine months. What's more, America's workforce, hasn't gotten a share of the new financial gains, taking only 1 percent of real national income growth. "Workers have no money, no purchasing power, so that's why consumption is not moving," says Northeastern economics professor Andrew Sum. According to studies, a decrease in small business sales is actually the primary cause for minimal hiring.