Today, the Washington Post has an article about how companies are sitting on their money, rather than hiring, or investing in capital expenditures that might ultimately lead to hiring.
Welcome to your jobless recovery.
From the article:
Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms’ coffers.
Yet all the good news from big business hasn’t translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren’t they hiring more workers?
The answer to that question has become a political flash point between the White House and big business groups such as the U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of “uncertainty,” which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.
The White House countered that companies are wary of hiring not because of new regulations but because they’re still waiting for consumer demand to return. The administration also claimed credit for 3.5 million jobs created by the stimulus bill from last year.
Ok, so that’s a lot of finger-pointing. I don’t think the unemployed give a damn about that, they want to know where the jobs are.
The question of how to encourage companies to hire has challenged policymakers.
A survey last month of more than 1,000 chief financial officers by Duke University and CFO magazine showed that nearly 60 percent of those executives don’t expect to bring their employment back to pre-recession levels until 2012 or later — even though they’re projecting a 12 percent rise in earnings and a 9 percent boost in capital spending over the next year.
When asked why companies are holding back so much, many economists cite broader uncertainty that goes well beyond anything happening in Washington. Firms aren’t sure whether the economy can sustain a strong recovery. And as long as consumer spending remains low, there’s not much incentive for companies to ramp up.
So wait, they’re making more money, but instead of using it to grow, they’re sitting on it. Is there an upside for the ordinary man anywhere?
Some analysts said it may be hard to create policy that compels companies to use some of their cash to hire workers. “CEOs don’t like taking risks. They kind of move in packs,” said Zachary Karabell, president of River Twice Research.
“There’s not a whole lot that you could do to entice companies to hire,” he added. “You could cut taxes on them, but they’re not going to hire just because they have the extra cash, because they already have the extra cash.”
I’ve got a suggestion. Since these guys have all this money sitting around, why not raise their taxes? If they’re not going to put the money to good use, or are too chicken to start a hiring trend, then at the very least something should be done with it. So tax the hell out of idle cash, then that will encourage some spending from these folks, which will mean jobs and some upside.
Or they could just tell the whole country to take a flying leap, which seems to the the US Chamber of Commerce’s current strategy.
Way to be, dillholes.