Companies Sitting on Cash, But Not Hiring

Created: July 15, 2010 13:04 | Last updated: July 31, 2020 00:00

Companies are back to profitability — in part because of the massive layoffs of the past two years. But they are not back to hiring yet, instead holding onto cash and waiting for a stronger recovery, Jia Lynn Yang writes in today’s Washington Post:

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.

I’ll have more on the debate over whether the jobless recovery is due to regulations, lack of demand or an uncertain business outlook later. But for now, I think this chart from Larry Mishel at the Economic Policy Institute shows the rising tide for businesses but the continued hard times for workers better than any other I have seen:

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