Employment growth at the largest US companies has lagged far behind increases in revenue and operating profit since the start of the century, as firms reaped the benefits of globalisation, technology, and other ways to operate more productively, according to a Reuters analysis of corporate data.
From 2001 to 2013, inflation-adjusted revenue at 100 of the largest publicly traded companies grew 71 per cent and inflation-adjusted operating profit rose 150 per cent. Global headcount reported in company financial filings rose 31 per cent.
Their headcount grew faster globally than overall employment in
Information from individual companies suggests a lot of the new jobs were created overseas, especially given that in this period there was offshoring and outsourcing of work that was done previously in-house and in the US There was also substantial growth in sales in foreign markets and a resulting expansion of operations overseas.
The data highlight a central question that officials in the Obama administration and at the US Federal Reserve confront: has the nation's ability to generate well-paying jobs in manufacturing and other sectors been fundamentally scarred by changes in the global economy that may predate the 2008-09 economic crisis but were more starkly revealed in its aftermath. The answer could have major implications for economic policy decisions, such as how long the Fed keeps interest rates at very low levels to stimulate jobs growth.
At the Fed, Chair
"We have to understand what structurally is going on... Is the country really changing in a fundamental way?"
Data on the 150 publicly-traded companies with the largest sales was collected from
Several companies, such as energy investment company
The resulting list of 100 large companies covers a range of industries, from consumer giants
The collective headcount of the 100 fell in only one of the years included in the study, dropping 1.33 per cent in 2009, the year in which the financial crisis and accompanying recession had the most savage impact.
Tyson workforce drops
But 30 of the companies actually cut jobs between 2001 and 2013 — even while managing, in some instances, very big increases in profit and revenue growth.
For example, between 2001-13,
Though fast-growing technology companies led employment growth over the period, that may not be sustained as those firms get bigger. The pace of hiring at Apple and Amazon , for example, has slowed after a 12-year spell in which both companies boosted headcount roughly ten fold.
A recent analysis he co-authored with economist
That could be a problem in itself.
"We cannot count on the Fortune 500 to absorb all our workers. That is not what they do. They make more out of what they've got," Litan said.
Company officials and outside analysts say several complementary forces are at work: globalisation and outsourcing, investments in labour-saving technology, and the more traditional efficiencies gained through takeovers and scale.
Much of this has been positive for the US and global economies — for example by manufacturing more goods in
Some of the employment trends began many years ago but may not have been obvious because they were masked by changes in demographics. The increasing numbers of women in the workforce, for example, kept family incomes growing through the 1990s,
Some analysts caution that it is difficult to draw broad conclusions based on data from the largest companies.
Through the 1990s, firms shed "non-core" operations, such as in-house security, something that boosted jobs at smaller companies, noted
Advances in global trade and logistics allowed companies like Apple to rely on contractors such as
To that extent, Apple's formal headcount does not reflect many of the people who rely on the company for jobs. Apple's headcount skyrocketed more than eight-fold over the last 12 years to more than 80,000. But reported headcount at
The US economy is also one where small- and medium-sized firms drive much of the job growth.
Technology may allow top companies to perform well but also "opened up other venues of success for labour that we would be thrilled with," said
Companies are not required to include payroll data in their financial filings so the analysis could not include wage trends.
But amid overall wage stagnation there is concern about a growing divide. According to
Some of the high-end manufacturing and research industries often seen as critical for US job and wage growth are also those where revenue and profit have become more clearly divorced from the need for more workers.
"Whether you like it or not what the global economy is delivering is that the productivity growth that has been realised has been earned by a small fraction of highly skilled people and returns to capital," said
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