Disclaimer: Not an economist. Seeing the stats in black and white is eye opening, however.
These two charts whisper to my intuition. Corporate cash-on-hand has risen to its highest increased levels since 1952, from 2007-Present at the same time long-term employment has done the same and the CURVE IS ALMOST IDENTICAL. Shareholders' dividends/stock values benefit while long-term employment rises.
Is this contributing to long-term unemployment? The charts seem to indicate it does:
http://online.wsj.com/...
Fortune 500 earnings soared this year, despite a feeble recovery, as companies cut costs fast and deeply. From Goldman Sachs to Google, here are the biggest winners
.
http://countusout.wordpress.com/...
Record profits, highest increase in cash-on-hand since the 1950s and 60s. And the worst unemployment/recession since the Great Depression.
Something doesn't quite add up if the curtain is pulled back.
But, hey, you decide.
Below is an overview of two economic factors. The dramatic, even historic, rise in cash-on-hand percentage/quantity holdings by major corporations and the dramatic rise in unemployment. The two charts above seem to indicate a relationship.
In fact, US unemployment seems to boost the cash-on-hand health of the very corporations who have laid off American workers.
If this is true, why would we expect to see the millions of unemployed ever restored to the jobs and salaries they once earned and enjoyed.
Even more unsettling is this question: If most corporate boards and officers benefit from profitability that seems to be bolstered by not hiring and paying living wages to American workers, and if the GOP is more corporate friendly, who are these wealthiest of the wealthy going to back in November. Democrats or Republicans?
I think we are doomed. So, what can we do about it. I don't know, I am asking you.
What can we do about this apparent Wall Street driven travesty?
Rather than pontificate, let's listen to the words of the experts:
The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963.
"Stockholders don't want them to keep sitting on cash at a zero return," said Paul Kasriel, an economist at Northern Trust. "They're going to use it," either to increase hiring and investment or to make payouts to shareholders in the form of dividends or share buybacks, he said.
Earlier this week, retailer Target Corp. raised its quarterly dividend to 25 cents a share from 17 cents, saying that the company's cash holdings were "well above the amount needed for optimal reinvestment in our core business."
http://online.wsj.com/...
To demonstrate how layoffs can be good for share values:
Target Corp., the popular discount retailer, is one of the latest chains to announce major layoffs.....
Soon after the company released its press statement, Target shares closed up 19 cents at $33.34 per share on the New York Stock Exchange today.
http://abcnews.go.com/...
The gist of the above-cited WSJ article seems to indicate that the cash-on-hand will be used to better the companies standing via higher dividends paid to shareholders and/or acquisition, not necessarily to employ or better pay employees.
Earnings for companies in S&P 500 surged 176% in the fourth quarter of 2009 and probably rose another 44% in the first quarter of this year, according to Bloomberg data. And that rise in earnings has been accompanied by a rise in cash holdings.
A recent analysis by Standard & Poor’s Financial Services LLC found that companies in the Standard & Poor’s 500 Index have some $831.2 billion on hand - 36.3% more than they had in December 2007 when the recession officially began.
Now investors are pressuring many of these corporate cash-hoarders to do something with the money they have on hand. Some of it will go towards the purchase of new equipment, the hiring of more staff, share repurchase programs, and acquiring rivals. But it’s also a safe bet that a large portion of that newfound wealth will be paid back directly to investors through dividends.
“Dividends show what companies are really saying, how they feel about the economy and their prospects,” Tom Wirther, senior investment officer at Chemung Canal Trust Co., told Bloomberg.
Over the past week alone, a record 22 companies announced they would reward investors with higher dividend payouts.
http://www.dailymarkets.com/...
A thorough reading of this DailyMarkets report will expose the companies flush with cash and paying higher dividends to its shareholders. Below you will find the layoff history for two of these companies, Kellogg and Johnson & Johnson.
Kellogg
Kelloggs dividend increase:
Consumer staple Kellogg Company (K: 52.68 0.18 0.34%) - founded in 1906 - has paid dividends since 1986. On April 23, the company increased its payout by 8% to $0.405 per share. Kellogg currently yields about 2.72%.
ibid. DailyMarket
The Kellogg history of layoffs beginning in 1996 to the present, in my opinion, is representative of how corporations seized the opportunities enabled by NAFTA: Layoff American workers, eliminate benefits, lower wages, and/or offshore mfg. Below is a link where you can review Kellogg's dismantling of American jobs.
SATURDAY, MARCH 28, 2009
Kellogg layoffs in Omaha
Kellogg said it eliminated the jobs of some production workers at its cereal plant in Omaha, expanding layoffs that began earlier this month...
The Battle Creek, Mich.-based company declined to disclose the number of workers who lost their jobs. But most of them were eligible for retirement, said Kellogg spokeswoman Kris Charles.
http://layofftracker.blogspot.com/...
Posted: November 19, 2009
Kellogg plant in Cary begins layoffs
http://www.wral.com/...
For an insight of how jobs have been lost to American Kellogg workers, read Kelloggs layoff history beginning in 1996. I think we can thank NAFTA SHAFTA for this:
http://www.wsws.org/...
Johnson & Johnson
J&J's dividend increase:
J&J last week boosted its dividend payout by 10.2% and the stock currently yields 3.32%.
http://www.dailymarkets.com/...
SATURDAY, APRIL 11, 2009
Johnson & Johnson cuts 900 jobs
Health-care giant Johnson & Johnson has eliminated about 900 positions from its U.S. pharmaceuticals unit, becoming the latest drug maker to slash costs amid generic competition and pricing pressures.
The job cuts represented about 6% of the U.S. work force.
HEALTH CARE November 3, 2009, 2:08PM EST text size: TT
Johnson & Johnson to Overhaul Pharma, Cut 7,000 Jobs
The huge health-care conglomerate has been hit hard by the recession, but it also needs to become more efficient.
http://www.businessweek.com/...
As an aggregious aside:
J&J CEO Weldon Bought $8.45M Waterfront Lot as He Planned 8,100 Layoffs
By Jim Edwards | Nov 3, 2009
http://industry.bnet.com/...
Of course, I can go on and on demonstrating this seemingly related trend for the companies boasting higher dividends paid to shareholders this year and their massive layoffs since 2007.
Most telling and easy to see is a journey through a wonderful service provided by Forbes magazine.
You can go to this link to view the month by month, year by year layoff histories of the Fortune 500 companies.
http://search.forbes.com/...
Also helpful, although a bit cumbersome, is this site begun in November, 2008:
http://layofftracker.blogspot.com/...
Is it possible that the gains on Wall Street and higher dividends paid reflect the benefits of massive layoffs?
And, if so, how does this bode for well-paying re-employment?
Where is the plan from either the Democrats or the Republicans to create something/anything to fully employ those about to lose their unemployment benefits, especially in areas of the country where there are NO JOBS.
Will we be seeing trucks piled with families and possessions harkening back to the days of The Grapes of Wrath?
Hasn't history proven time and again that mass unemployment/poverty creates unnecessary societal chaos? increased crime? suicides? spousal/child abuse? addictions? theft? and the tax burden of increased incarcerations?