The earnings of companies including Starbucks (SBUX) and Caterpillar (CAT) have been better than expected. A number of analysts and the press have pointed out that one-time cost cuts, including lay-offs, can’t be sustained. Top line revenue will have to begin to grow to fuel long-term earnings improvement.

The problem is greater than keeping earnings moving up.

Starbucks and Caterpillar did well in the second quarter because each fired several thousand people and made other cost cuts.

Firms that have mass layoffs do a great deal of damage to the economy. It is damage that will eventually come back to bit them as unemployment undermines a chance for a rebound in consumer spending and capital investment.

The government may provide unemployment benefits to workers for a relatively brief period, but that will do nothing for the fortunes of a number of companies. Starbucks doesn’t take food stamps.

24/7 Wall St. TV executive producer: Philip MacDonald