Corporations have money, so why aren’t they hiring?

August 5, 2010

Recent studies have shown that corporations are making money, so why is our unemployment rate still sitting at 10%? Business groups such as the U.S. Chamber of Congress have stated that the current administration has created uncertainty in the market by passing a large number of regulations, such as the infamous health care bill. The health care bill places fines on companies with over 50 employees if they do not offer a group health care plan. An unintended consequence of this is that companies may try to trim their workforce to stay below the 50 mark.

The White House states that businesses are waiting for demand to return, but a recent survey of financial officers shows that “ . . . executives don’t expect to bring their employment back to pre-recession levels until 2012 or later — even though they’re projecting a 12 percent rise in earnings and a 9 percent boost in capital spending over the next year”.

Some economists also speculate that global competition has ramped up and corporations want to hang on to their cash while they figure out the best way to compete with companies in countries that have fewer regulations.

For more on this topic, check out this article from The Washington Post.