The prime conservative economic falsehood is that we must cut taxes on the wealthy and corporations because they'll "create" new jobs with the savings. Of course, corporations don't "create" jobs because they're swimming in cash; they open up positions in response to consumer demand. The AFL-CIO shows the disconnect between right-wing rhetoric and fiscal reality in a chart and commentary, "Corporate Cash Hoarding Holds Back Job Creation," that tracks the shedding of jobs in the U.S. among five booming corporations:
Since the Wall Street financial crisis, the largest U.S. non-financial corporations have amassed record levels of cash. But rather than investing these cash hoards to expand their operations and create jobs, many companies have shed workers in the United States.
At the end of 2011, the largest non-financial companies in the S&P 500 Index had accumulated more than $1 trillion in cash, a historic high. Corporate cash was up 66 percent from the end of 2007, before the Wall Street financial crisis.
This comes at a time when the U.S. unemployment rate has exceeded 8 percent and more than 12 million Americans are looking for jobs. While overall employment at S&P 500 Index companies has grown since 2007, cash stockpiles have grown even faster.
Most of this job creation has been overseas. According to the Bureau of Economic Analysis, the U.S. parents of multinational companies cut a total of 864,000 jobs between 1999 and 2009, while their foreign affiliates added 2.9 million jobs.
...How many jobs could be created if U.S. companies reinvested their cash to grow their businesses rather than holding it on their books? Enough to put America back to work.
...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 $1.4 billion in cash into productive investments and job creation, unemployment would fall below 5 percent by the end of 2014.