Sunday, July 25, 2010

Companies pile up cash but remain hesitant to add jobs

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 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.

In my industry, we need the US Congress to act on legislation that will create the certainty required for investment flows that will aid in driving growth. An excerpt from Tom Friedman's NY Times Op Ed for today illustrates this sentiment:

...Lew Hay, the C.E.O. of NextEra Energy, which owns Florida Power & Light, one of the nation’s biggest utilities, e-mailed to say that if the Senate would set a price on carbon and requirements for renewal energy, utilities like his would have the price certainty they need to make the big next-generation investments, including nuclear. “If we invest an additional $3 billion a year or so on clean energy, that’s roughly 50,000 jobs over the next five years,” said Hay...

What's interesting about how the Chamber is projecting it's argument, is that it is focusing primarily on the Obama administration. However, their aim (in this instance) should also be at the US Congress. And more pointedly at those who are blocking this legislation in various ways. They're focusing squarely on one person/group (President/Administration) when there are more who are culpable for inaction.

At the end of the day, the US Government doesn't have the kind of control over the economy most think it does. And the main reason corporations are sitting on cash doesn't have as much to do with the uncertainty of current government actions as they're leading you to believe. This argument is mostly about political posturing by a group that disagrees with the current ruling party's policies. There's nothing wrong with disagreement, but surely they could point that out and maintain some semblance of integrity.

Taking a broader view: How is this any different from other areas of the economy that needs to be addressed? I think it's disingenuous to focus on only one person or group. And most agree that the politics of today -- on both sides of the political spectrum -- leaves much to be desired.

So, instead of playing the blame game and all this disgusting back-and-forth banter, lets get up and do the right thing. Not because we could demand it of ourselves. But because it's the right thing to do.

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