In short, most of them are not helping.
I closed that piece by saying they required to pay workers more, fight to keep jobs on the shores, and invest in our collective American future. It was time to allow them to step up and serve their country, again. These had been hardly revolutionary concepts. In recent weeks throngs of people took to the streets in the nationwide Occupy protests to voice an extremely similar message.
The Occupy naysayers like to call the protesters unfocused and I will admit the messages from the streets have been wide-ranging. So, let me be particular. If the corporate tycoons would utilize their growing stockpiles of cash to purchase America, the gloomy economic forecast would clear quickly.
Let me use the companies of the Dow Jones Industrial Average (DJIA) for example. The DJIA is a stock market index, a method of measuring a section of the stock market to make broader market-wide assumptions. The health or wealth of the DJIA isn't a scientific sample to be extrapolated to the whole market, but it can give a general sense regarding the state of the market.
While there are a wide selection of measures to consider when evaluating companies, let's look at among the simplest to understand, cash. Cash and equivalents are probably the most liquid assets found on a company's balance sheet. They're the assets most easily converted into cash, such because money market holdings, short-term government bonds or Treasury expenses, marketable securities and commercial paper.
In times of doubt, companies stockpile cash. And, boy, are they. The way DJIA companies are accumulating cash reserves, it is surprising A&E television isn't filming a unique segment for its popular show "Hoarders. "
Before the actual financial collapse in 2008, DJIA companies had $233. 5 million on-hand in cash and equivalents. As of June of the year, their combined cash and equivalents total skyrocketed in order to $431 billion, an increase of over 184 percent. What this means is the 30 DJIA companies have taken $197 billion which was once invested in operations, returned to stockholders in the shape of dividends, paid in salaries to employees, or aggressively committed to growing business, and put it in the most unaggressive of investments, cash and equivalents. Corporate America has taken money out of active circulation available and stashed it waiting for a sunnier, safer perspective. This may not be the exact corporate equivalent associated with grandma taking her life savings and burying it inside a coffee can under the willow tree, but it is actually close.
It is understandable why a company would increase cash holdings during a down economy, but doing so in such a collective and severe measure makes the recovery harder and longer. If the DJIA companies and also the rest would begin to take money out of cash and equivalents and purchase business and growth, jobs would increase, buying would cv, and the economy would begin to rebound.
There is definitely an undeniable selfishness in a company refusing to invest or even distribute wealth. Stockholders are better off when a company is investing and growing than when it's in a cash laden holding pattern. If the company chooses to not invest, it should distribute the cash to stockholders and let them achieve this. Economic recovery depends on each of us doing the part. American workers need to be diligent and effective. In return, they need to be paid a sensible wage. American CEOs and their corporate boards need to wisely turn cash and equivalents into meaningful investments which will grow the economy by creating jobs and wealth at home.
The Occupy protesters are pointing their fingers at high-paid corporate executives suggesting it's time they discover what "right-sizing" tastes like. Executive salaries and the growing wealth divide is an important the main discussion, but for now, let's stay focused on something meaningful CEOs can do to create a difference. It is time for CEOs to redirect the towering piles of money available on corporate balance sheets under cash and equivalents and commit in the U. S. A.
CEOs, your companies is going to be better for it. Your country will be better for this. And, here is a side benefit: the noise coming from the Occupy protests outside your windows will start to quiet a little if you begin to show you are looking at something more than just protecting yourselves under a quilt of cash.
