Five Companies Stockpiled Nearly $60 billion While Cutting 64,000 Jobs Worldwide From 2007 to 2011

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One frequently cited rationale for corporate tax breaks is that companies will use the extra money to create jobs. They’d love to create jobs, we’re told, if only they could afford to do so, and one more tax break will make that possible. Instead, we see that many companies are sitting on giant piles of cash and cutting jobs anyway. The AFL-CIO’s Paywatch includes some data on major corporate cash hoarders — five companies that added $57.8 billion to their cash stockpiles between 2007 and 2011 while cutting more than 64,000 jobs worldwide. (We can’t know how many of those jobs were in the United States, because companies aren’t required to tell us that.)

Verizon, which leads the pack, having cut 41,100 jobs while its “cash holdings and short-term investments grew 311 percent to $14 billion at the end of 2011, from $3.4 billion at the end of 2007,” is also a major corporate tax avoider. Verizon paid a negative effective federal income tax rate from 2008 to 2011 while chasing after more and more tax breaks and trying to force its unionized workers into taking cuts to health care and benefits and job security.

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Verizon may be the worst, cutting jobs, trying to make jobs worse, and accumulating a Scrooge McDuck-style cash hoard, but it’s not just Verizon. Nonfinancial corporate businesses had $2.2 trillion in liquid assets at the end of 2011, and the fact that they’re just sitting on that is hurting the American economy:

According to the International Labor Organization (ILO), if U.S. nonfinancial corporations invested $508 billion of their excess cash holdings, U.S. GDP would grow an additional 1 percent to 1.6 percent a year between 2012 and 2014 and 2.4 million new jobs would be created. Another study by the Political Economy Research Institute found that if corporations and banks invested cash into productive investments and job creation, unemployment would fall below 5 percent by the end of 2014.

We know that helping these corporations accumulate more money doesn’t create jobs or help the working economy. And if lower corporate taxes created jobs, the United States would be at full employment and looking into making second jobs mandatory, given our effective corporate tax rate. If corporations are going to act only in their own shortest-term self-interest, our policies and politics should at least reflect that, and make it mandatory for them to pay something approaching their share.

Reprinted with permission from Daily Kos

 

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