U.S. Economy Adds 162,000 Jobs

Companies Not Spending Cash on New Hires

Actually, according to Bianco, shareholders will soon start to demand that cordoned off cash be put to work, either through some form of growth initiative or at the very least used to pay out a higher dividend. In either case, it's not expected that the cash being hoarded will at any point translate into rapid hiring.

"Companies slashed their work forces and now find that they could function far more resourcefully than they ever realized possible," Bianco said. "If anything, we could start to see some of the money being used to expand overseas or to acquire other companies. In either case, that does not bode well for job creation. In fact, mergers lead to job reductions unfortunately."

Bianco expects 9 percent-plus unemployment to persist though the end of next year. In other words, if there is a recovery it will be slight and a jobless one, as many have feared.

Government's Hiring Push

The government, meanwhile, is working hard to spur hiring.

Alan Krueger, assistant secretary for economic policy at the U.S. Department of the Treasury, points out that President Obama recently signed a jobs creation act known as HIRE which includes a variety of incentives. HIRE, for example, exempts companies from paying social security payroll tax if they hire someone who has been out of work for more than two months, and offers them a $1000 cash bonus if they retain the worker for a full year.

He adds that the administration has also been focused on stabilizing financial markets and fuelling consumer demand, two measures which in the long run should start boosting the need for workers.

"We've been trying to set conditions so companies can feel more confident to expand," says Krueger, pointing to efforts such as the Financial Stability Plan and the American Recovery and Reinvestment Act. "As companies become more confident that markets have stabilized, they will be more willing to take risks and invest their cash reserves."

Hiring to Make Money

Regardless of how many hiring incentives the government passes, experts say the jobs market faces a long, tough recovery. Companies simply won't begin to hire workers unless they see a valid business reason to do so. As long as the economic outlook remains cloudy, employers will continue to hold on to their reserves, predicts Rene Stulz, a finance professor at Ohio State University and an expert in cash reserves.

"It makes sense to put cash [...] in hiring people if you can make money. It doesn't make sense to take the cash and hire people if you're going to make losses," he said.

With reports from ABC News' Alice Gomstyn.

-- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345. -- This embed didnt make it to copy for story id = 10263345.
Page
  • 1
  • |
  • 2
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...
See It, Share It
PHOTO: Firefighters rescue a woman who got stuck in a chimney in Thousand Oaks, Calif.
Ventura County Fire Department
PHOTO: Apple Pay is demonstrated at Apple headquarters on Oct. 16, 2014 in Cupertino, Calif.
Marcio Jose Sanchez/AP Photo
PHOTO: Up in Ash: Mount Sinabung Erupting
Tibt Nangin/Anadolu Agency/Getty Images
PHOTO: Defendant Jodi Arias testifies about killing Travis Alexander in 2008 during her murder trial in Phoenix, Feb. 20, 2013.
Charlie Leight/The Arizona Republic/AP Photo
PHOTO: Kim Kardashian, Kanye West, their daughter North West and Delphine Arnault attend the Givenchy show as part of the Paris Fashion Week Womenswear Spring/Summer 2015, Sept. 28, 2014 in Paris.
Bertrand Rindoff Petroff/French Select/Getty Images