Just As I Thought

Making More With Less

I’ve wanted to rant about this for a long time, but didn’t have the energy to do it — until a very short, very interesting article appeared in today’s paper which illustrated my point perfectly.

I’ve wanted to rant about this for a long time, but didn’t have the energy to do it — until a very short, very interesting article appeared in today’s paper which illustrated my point perfectly.

San Jose tech powerhouse Cisco (CSCO) may lay off up to 5,000 workers beginning in August, a San Francisco-based analyst reported Monday.

Bloomberg News reported that the research from Gleacher & Co. shows cutting its workforce by that amount would cut the company’s operating expenses by about $1 billion annually and boost earnings for this year by 12 percent.

Cisco garnered nearly $7.8 billion in profit on more than $40 billion in sales last year; however, a series of disappointing earnings reports this year led CEO John Chambers to acknowledge the company had lost focus. Since then, he’s made management changes, trimmed business segments and announced plans for more cuts this summer.

Republicans love to trumpet their protect-the-rich ideology and claim that by cutting taxes and regulations, businesses (many of whom aren’t even paying taxes to begin with) will start hiring and solve the unemployment problem.

But this is a case in point. Cisco brought in more than $40 billion last year. Out of that, they made more than $7 billion in profit — profit is that thing you make AFTER you pay your workers and their benefits. However, that wasn’t enough — instead they want to boost that profit by 12% by raising the unemployment rate some more. It’s not that they can’t afford the workers, it’s that they want to make more money and workers are expensive.

Yes, this is a very simplistic view, but it serves to illustrate my point. American corporations are flush with profits these days. That’s because when the recession hit they laid off a huge amount of workers. The remaining employees, scared of losing their job in an economic downtown, buckled down and worked harder than ever — sometimes harder than is wise — and kept the corporate profits up. “Aha!” exclaimed the bosses. “We can make the same amount of money with half the workers, thus boosting our profits significantly!”

And that’s where we are today. Companies are making more and more money off the backs of fewer and fewer (and lower-paid) workers. Why would they bother spending the profits on hiring more of them?

Meanwhile, the Republicans are busy dismantling government and are themselves contributing to unemployment by laying off thousands of government workers. Would that we could lay off some of the workers in the well at the House of Representatives.

Now tell me: how is giving corporations more money, more tax breaks, and fewer workplace rules going to solve unemployment?

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