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Corporations Not Spending on Hiring

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The Washington Post ran an article on Saturday August 21, 2010 on the disparity between corporate profits and corporate spending on new workers. Recovery will not come under the current paradigm. Someone has to be first to release the log jam.

Putting things into perspective, if corporations set aside 10% of March 2010 reported profits (1.57 trillion) and use it to add one $75 K worker and invest $10 K to appropriately retrain or upgrade a worker’s skill set, 1.6 million Americans could be back at work. This releases approximately $100 billion of potential spending power back into the economy. Increased consumer spending power will allow for consumption, debt amortization and investing which is the demand everyone is waiting for. Create jobs first thereby increasing the consumer base then demand will follow. It may result in a short term dip in profits but the investment will likely pay higher long term dividends than continued hoarding of profits and cash.

Over simplified? Perhaps, but you get the picture.

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