The current wave of layoffs at several large companies seems to
confirm in many reporters' minds their view of how the business
world works: Corporate America racks up record profits for wealthy
shareholders while laying off millions of workers.
That's how the networks have reported the layoffs. But with a
little digging these reporters could have found that corporate
profits are not unusually high, that shareholders are not just rich
people, and that more jobs are being created than destroyed.
Anchor John Roberts set the tone of the layoff coverage on the
December 26 CBS Evening News: "The market has been hitting one
record high after another. But as Economics Correspondent Ray Brady
reports, many workers have paid a heavy price." Brady then
interviewed "ex-Wall Streeter" Michael Thomas, who told viewers what
he seemed to think was shocking: "Executives are running companies
exclusively for their stockholders."
This focus on the interests of stockholders, Brady explained, has
meant layoffs at such established companies as 3M and AT&T, which
caused their stock prices to jump. "Who pays the price for this
stock market prosperity?" Brady asked. "Come to any job center,
where laid off middle managers scramble desperately for work.
Corporate America announced more than 41,000 layoffs last month
alone, up 45 percent over the same month a year ago."
Martha Teichner, Brady's colleague at CBS, joined the chorus on
the January 7 Sunday Morning. "For all of 1995, the figure was
nearly 450,000, but, hey, that's the good news. In 1993 it was
615,000," Teichner reported. "Here's a statistic for our leaner and
meaner times. Since 1980, Fortune 500 companies, America's biggest
and most profitable corporations, announced layoffs of more than
eight million people. That's like laying off the entire population
of New York City."
Over at NBC, on the January 4 Nightly News, Mike Jensen agreed.
After saying that some companies had to downsize in order to
survive, he said, "Some companies simply decided to make more money
by firing people. Corporate profits totalled about $400 billion last
year, up 25 percent. What all those companies did was obliterate one
of the keystones of the American Dream, the security of a job for
life. They created anxiety for everyone, even those who didn't get
But just how high are corporate profits? According to the January
4 Investor's Business Daily, which quoted a study by the Employment
Policy Foundation, corporate "profits have dropped from an average
of 12 percent of national output in the 1960s, 1970s, and 1980s to
about 9 percent currently -- a decline of about 25 percent in
profits' share of total output."
About those supposedly greedy stockholders, the newspaper pointed
out that they may not be who viewers were led to believe they were:
"With more than half of all Americans now owning stocks through
retirement, mutual, and individual shareholder accounts, it is the
average American who benefits most from corporate profits -- not
some fat cat on Wall Street."
And here's a statistic for Teichner: "Little noticed among the
repeated headlines of Fortune 500 firms cutting jobs are the
literally thousands of small and medium-sized firms that are adding
new workers at a frenetic pace. Since the start of 1994, more than
five million new jobs have been created in the U.S. economy -- more
than enough to sop up all the new entrants in the work force."
Reporters seem to think the entire business world begins and ends
with the Fortune 500. Until they start looking at the entire
economy, they won't be able to tell the entire story.