Friday, November 12, 2010

http://hbr.org/2010/11/column-wealth-and-jobs-the-broken-link/ar/1

This link is to an interesting article in HBR. It offers an explanation of why corporate America is doing well with over $1.5 trillion of retained earnings, and why there are 5 people looking for every job that is available. Essentially, the link between business value creation and job creation has been broken. For example, Google and Facebook are growing rapidly but the growth in their workforce is not like it was in the past when GM's growth stimulated growth in middle class jobs. Similarly, hedge funds trade billions of dollars with much fewer workers than a bank dealing with the same dollar volume. A small number of workers share a very large pool of profits. Its hard to imagine how the US economy can move forward without reinvesting in manufacturing technologies that they are exporting to low-cost regions of the world.

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