November Unemployment Rises to 9.8 Percent

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A dialog like the following, he says, has gone on between CEOs and their managers: 'Why can't we take advantage of our improved productivity and take more people out? Why can't we get rid, say, of Old Fred there?' The answer always was, 'We can't do that. Old Fred knows the customer. Old Fred holds the team together.'

"There was an aversion to risk," says Lewis, so long as it was optional to let more workers go, employers hesitated. But then came 2008.

Getting rid of people became "a necessity." Lewis says the CEOs he knows told their managers, 'Ok, look. I don't give a damn. Yes, it's a risk. It may hurt to get rid of Old Fred. But we have no choice.'"

The same CEOs, he says, were shocked to discover not only that "it didn't hurt so much to lose these people," but that later, as volume returned, companies didn't need to bring them back. They found they could get along by using temps and by discontinuing products they knew to be unprofitable.

Rather than sitting on their money, Lewis asserts, the S&P 500 have been using it judiciously, in the following proportions, to accomplish the following ends: reducing net debt (50 percent), share buybacks (10 percent), dividends (20 percent), and acquisitions (20 percent).

So when will this sea of corporate cash finally translate into hiring?

"My sense," says Lewis, "is that we're another six months away from CEOs' starting to hire. Once they see old demand come back, then they'll start worrying about new demand. They'll start bringing in new people."

Happy day! And then, after that? "Productivity goes down."

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