File Under: The Rich Get Richer

Posted on March 26, 2010
Filed Under Greed, Main | Leave a Comment

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FedEx profits are up, but hiring is at a standstill
Under the headline “Big companies are awash in cash as economy picks up,” The Los Angeles Times reported (March 24) that although many individuals, small businesses and even states have been devastated by the recession, many of the country’s biggest companies are “loaded with cash, thanks to deep cost-cutting that helped drive unemployment into double digits.”

“The good news for America now is that companies are very competitive, flush with cash and ready to expand,”   Joseph Carson, an economist at money management firm AllianceBernstein in New York, told the Times.  But, according to the paper, “others worry that the business giants’ clout has increased significantly at the expense of workers — the millions in the ranks of the jobless as well as those who remain employed but must work harder than ever.”

“More and more of the balance of power in society is shifting toward corporations,” said Thomas Kochan, a management professor and co-director of the Institute for Work and Employment Research at MIT in Cambridge, Mass.

According to the Times, “by one prominent measure, major companies had extraordinary success weathering the recession: Industrial companies in the Standard & Poor’s 500 index, a list that includes such giants as 3M Co., Coca-Cola Co. and United Technologies Corp., ended last year with a record $832 billion in cash and short-term securities on their books, up 27% from a year earlier.”

And while there are signs that some business are beginning to reinvest their overflowing coffers of money, others are taking a wait and see attitude — while workers sweat it out.

San Jose’s Cisco Systems Inc., a leading producer of computer networking equipment, last month said it would add  up to 3,000 workers to its worldwide staff of 66,000 employees to keep up with rising demand. At the other end of the spectrum is the FedEx Corp., whose profits more than doubled in the quarter ended Feb. 28 compared with last year’s depressed level.  According to the Times, “Although the company early this year reinstated merit-based pay increases, it remains ‘very strict’ on hiring, said Chief Financial Officer Alan Graf Jr. No job can be filled without the OK of a senior management committee.”

A committee that, most likely, will need to give itself seven-figure raises first. But that’s a story for another time.

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