NYT: Who the Job Creators Really Are
http://economix.blogs.nytimes.com/2014/03/31/who-the-job-creators-really-are/
Over the last two expansions, after-tax (and before tax) profits did better — meaning they claimed more of the nation’s income — than in any of the prior four expansions of comparable length. Yet both compensation and job growth did the worst. What’s going on? Why isn’t profitability creating jobs? Where art thou, job creators?
One response is that profits typically recover before wages or jobs. True, but this far into the expansion — which is now about the average length of all post-war expansions — that shouldn’t assuage anyone’s fears. Another response is to note that the compensation share of national income has been flat or falling for a long time.
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The implications of the above are as follows. First, we must think broadly about job creators and discount simple links between profits and jobs. If booming share prices and corporate profits lifted the poor and middle class, believe me, we’d know it by now. Second, we should be equally skeptical of arguments about the job-killing impact of taxing and regulating. Such measures should not be taken lightly, of course, but neither should we beggar our fiscal accounts or our environment to protect phantom job creators.
Third, we must pursue policies that increase the bargaining power of those who depend on paychecks as opposed to portfolios. Full employment is the best medicine, as that is associated with both robust profits and paychecks. But in the meantime, a higher minimum wage and the proposed new overtime rules could help slice national income up a bit more evenly.
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