Excess Corporate Cash Could Create Jobs
IF U.S. CORPORATIONS invested their excess cash in capital projects, they could create as many as 2.4 million jobs over the next three years, according to researchers at the University of Maryland's Smith School of Business in College Park. The researchers estimate that nonfinancial corporations are holding about US$508 billion in excess cash—only one-fourth the amount that many had believed companies were hoarding, but enough to make a difference in turning the U.S. economy around.
The study, conducted through the school's Inforum Research Center, was commissioned by the United Nation's International Labour Organization as part of its Global Employment Trends 2012 report.
But even though companies could invest that money, it doesn't mean they will, says Jeffrey Werling, an economist and executive director of Inforum. "It's not surprising that U.S. industry would be tight-fisted given the highly uncertain economic environment, but the consequence is a low level of total investment, economic growth, and job creation," he says. If companies invested even half of that cash, they could create more than 1 million jobs in 2012 and 2013.