Nonfinancial companies have $1.8 trillion -- far more than they had just two years ago. Sadly, they aren't spending much of it on hiring jobless Americans. Some business leaders say they aren't confident that the economy is improving, despite profits being up. Way up. So what's it going to take for company leaders to invest in their businesses by hiring more folks? Hiring not only improves the psyche of the America, but it would also help those who have been pulling double-duty in understaffed offices and factories across the country since the start of the recession.
With executive bonuses still flowing liberally, I would guess that CEOs and CFOs aren't cutting back much on personal spending, which leads me to wonder whether they are being truthful in their economic forecasts for their companies or just hoarding profits in order to buy another summer home or exotic sports car. Perhaps they are angry at President Obama and the pressure he's putting on big businesses to clean up their acts. Maybe they are resisting hiring out of some sort of political payback. Or maybe they are sincere in their cautious approach. Could be all of the above.
Whatever the reason for the lack of hiring, it's bringing down the country and a lot of innocent people with it. Employers who have the cash and a need to hire but won't are acting in an unpatriotic manner. Their reluctance to hire is ripping apart families, crushing the real estate market, and hurting retailers and smaller business from coast to coast. State and local governments are suffering because fewer people are paying taxes. Highly profitable companies that aren't filling much-needed positions aren't being fiscally prudent. They are being selfish.
Doing business has always involved a degree of risk. Many companies have been rewarded for taking those risks. But we now seem to be in a new era where innovation is trumped by cutting jobs, where the quickest and only path to profits seem to be in eliminating employees or exporting jobs overseas. If this continues, not only will the American dream fade away, capitalism itself will be at risk. Simply put, without jobs people can't buy things. That fact will cause many more businesses to go extinct. So in a way, businesses that are refusing to hire are sealing their own fates.
Getting back to the concept of risk. Republicans like to argue that cutting taxes allows the wealthy to take risks, to open or expand businesses, which creates jobs. But from what we've seen so far in this modest recovery, bulging profits aren't sparking expansion. Cutting taxes on the rich seems to only grow the deficit and the money pocketed by the wealthy. If there was hard evidence that more tax breaks would create more jobs, I'd say go for it. However, the opposite seems to be true. This is not the Reagan era. The wealthy have enjoyed the fruits of the Bush tax cuts, yet have not increased hiring. So why continue with this strategy?
The mindset of those who are prospering in the recession seems to be to hold onto every dime they earn or get back from Uncle Sam. If businesses want to make a case for more tax breaks, they need to start taking more risks by hiring. I don't say this just to get people back to work, but to illustrate that one hand washes the other. Businesses that hire should get certain concessions. Those that don't, even though they could, should not receive any breaks from the government or taxpayers. In addition, hiring could actually increase profits. I think too many businesses have lost sight of that in the quest to reduce the workforce. There is a price for cutting too close to the bone. Competitors that maintain or grow their businesses could gain a huge advantage over those who refuse to take smart risks. Perhaps this is why smaller, more nimble companies, like Martin Guitars, are weathering the storm. The family-run Martin company has not cut jobs, yet they are still selling quality instruments, innovating and maintaining their position in the market. The company did not panic and as a result are being rewarded.
A new report suggests that there will be one million home foreclosures in the next 12 months. This is another sign of the stagnant job market and unemployment benefits running out. It is hard to find a job when you don't have a home. It's difficult to obtain credit to buy new things in the future when you have been foreclosed upon. Until jobs return, this cycle of pain will continue to ripple through the country and the entire economy. And some believe that we lost so many jobs in this recession that things will never return to normal. So it is in the interest of everyone that profitable companies resume hiring sooner rather than later. Payroll is the top expense for most businesses, but there are other ways for many companies to tighten their belts. Some family-owned businesses are particularly good at cutting costs without cutting jobs, maybe because smaller companies tend to view employees as human beings and not just numbers.
I have long suspected that there were far more layoffs in this recession than there needed to be. There is plenty of evidence to suggest that some job eliminations were a way for companies to raise their stock prices by fattening their profit margins. Wall Street seems to react favorably to slash-and-burn tactics. In this recession, it appears too many businesses jumped on the opportunity to get leaner, whether they needed to or not. The job losses spun out of control. A hundred here, a thousand there soon added up to millions of laid off workers. People who held jobs for decades began collecting unemployment benefits for the first time, and were made to feel bad about it by those on the far right. That travesty continues.
Now that the stimulus money is circulating through the economy and companies are making larger profits, one would think that jobs should return -- not all but far more than we're seeing. However, given human nature, greed and the tendency for some companies to embrace doing more with less, it is probably going to take something more dramatic from the government to force what businesses should be doing on their own by now. It appears that if businesses want to avoid further federal mandates, it would be in their best interest to begin using some of the $1.8 trillion to hire qualified people who have been desperately looking for work. It's up to profitable businesses to help restore America. This is no time for hoarding profits.
Read more in The Washington Post.
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