There are about 14 million unemployed in the United States while corporations continue to report billions in profits and are sitting on over $ 2 trillion in cash, the largest accumulation not seen in almost fifty years.
Why companies are not hiring though? There are several reasons for having such a poor labor market and weak economic situation in the world’s largest economy.
According to the latest Labor Department report, there are 3,228,000 jobs available. With the high number of unemployed people we currently have, if these positions would not be filled sooner or later and the unemployment rate doesn’t change from 9.1% to 7%, we will also have billions of dollars increase in the legal expenses that unemployment creates.
Where is the problem?
According to the surveys done by Gallup and McKinsey Global Institute, CEOs and small business owners claim that they have difficulties in finding qualified employees with the right skills for the available jobs.
Thanks to technology, employers have become able to maintain and promote their businesses with less number of workers and employees. On the other hand, there is a significant decrease in the number of job opportunities, due to the drop in construction and real estate.
Paying less tax is the other problem. There are so many U.S. companies that are keeping cash in their foreign subsidiaries to avoid paying tax on the money repatriated to the United States. An analyst at JP Morgan analyzed the public documents of U.S. companies abroad and identified 258 companies that have $ 368 billion dollars in cash stationed outside of the United States. 28 out of these 258 companies, hold 90% of their cash out of the USA. Hewlett-Packard company, Dover Corp., Gulfmark Offshore, Inc., Brightpoint Inc. and Arrow Electronics, Inc. are some of these companies. These companies have stated that they do not intend to bring money to the United States, because they will have to pay tax on the money they transfer to USA. Some of the other companies have stated that they have to keep their money outside of USA, because of the necessary business needs.
Insurance companies try to force the government to increase the tax in the United States, because of the unemployment insurance. 16 to 26 states are thinking about raising taxes to pay for the money they have borrowed from the federal government to cover unemployment insurance excess. It would be a rise in state and federal taxes to cover the balance and interest. Who is paying this excessive tax? The Companies!
There are also some discussions about possible changes in the tax laws. Some groups argue that either the taxes have to be increased, or the subsidies and benefits granted to the companies have to be decreased, in order to cover the high deficit and debt levels of the federal government.
The issue of cost per employee is another problem. According to an annual survey by the Kaiser Family Foundation, 3184 randomly selected companies reported an average of 9% increase in health insurance payment compared to 2010 that had a 3% increase only. Although this rise is not adjusted for the inflation yet, it is still high.
This shows that employers are paying more for health insurance of their employees.
Another reason is the decrease in demand, because of the consumers debt and low income, and their worries about their jobs and savings, the crisis in Europe where the market bet that there will be a default, questions about the capitalization of European banks, fear in the bonds of sovereign countries and poor economic growth in the strong countries like Germany and France, and Asia where the second largest economy, China, is fighting inflation, excessive credit and a decline in economic output. And finally Japan which is not getting up as quickly as it should be.
Source: Forexoma.com
Why companies are not hiring though? There are several reasons for having such a poor labor market and weak economic situation in the world’s largest economy.
According to the latest Labor Department report, there are 3,228,000 jobs available. With the high number of unemployed people we currently have, if these positions would not be filled sooner or later and the unemployment rate doesn’t change from 9.1% to 7%, we will also have billions of dollars increase in the legal expenses that unemployment creates.
Where is the problem?
According to the surveys done by Gallup and McKinsey Global Institute, CEOs and small business owners claim that they have difficulties in finding qualified employees with the right skills for the available jobs.
Thanks to technology, employers have become able to maintain and promote their businesses with less number of workers and employees. On the other hand, there is a significant decrease in the number of job opportunities, due to the drop in construction and real estate.
Paying less tax is the other problem. There are so many U.S. companies that are keeping cash in their foreign subsidiaries to avoid paying tax on the money repatriated to the United States. An analyst at JP Morgan analyzed the public documents of U.S. companies abroad and identified 258 companies that have $ 368 billion dollars in cash stationed outside of the United States. 28 out of these 258 companies, hold 90% of their cash out of the USA. Hewlett-Packard company, Dover Corp., Gulfmark Offshore, Inc., Brightpoint Inc. and Arrow Electronics, Inc. are some of these companies. These companies have stated that they do not intend to bring money to the United States, because they will have to pay tax on the money they transfer to USA. Some of the other companies have stated that they have to keep their money outside of USA, because of the necessary business needs.
Insurance companies try to force the government to increase the tax in the United States, because of the unemployment insurance. 16 to 26 states are thinking about raising taxes to pay for the money they have borrowed from the federal government to cover unemployment insurance excess. It would be a rise in state and federal taxes to cover the balance and interest. Who is paying this excessive tax? The Companies!
There are also some discussions about possible changes in the tax laws. Some groups argue that either the taxes have to be increased, or the subsidies and benefits granted to the companies have to be decreased, in order to cover the high deficit and debt levels of the federal government.
The issue of cost per employee is another problem. According to an annual survey by the Kaiser Family Foundation, 3184 randomly selected companies reported an average of 9% increase in health insurance payment compared to 2010 that had a 3% increase only. Although this rise is not adjusted for the inflation yet, it is still high.
This shows that employers are paying more for health insurance of their employees.
Another reason is the decrease in demand, because of the consumers debt and low income, and their worries about their jobs and savings, the crisis in Europe where the market bet that there will be a default, questions about the capitalization of European banks, fear in the bonds of sovereign countries and poor economic growth in the strong countries like Germany and France, and Asia where the second largest economy, China, is fighting inflation, excessive credit and a decline in economic output. And finally Japan which is not getting up as quickly as it should be.
Source: Forexoma.com
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