UMD Study Finds Excess Corporate Cash Could Create 2.4M Jobs

UMD Study Finds Excess Corporate Cash Could Create 2.4M Jobs

Economic researchers at the University of Maryland conducted a study showing that if corporations invested their excess money into capital projects, around 2.4 million jobs could be created. Although the economy is not where it could be, corporations seem to have the ability to create an economic stimulus if they choose to do so.

A University of Maryland economist and executive director of the Inforum Research Center, Jeffrey Werling, said "We estimate that non-financial corporations are holding about $508 billion in excess cash, about one-fourth the size of the ‘cash hoard’ figures regularly thrown around in the U.S. media. However, this is still more than three percent of gross domestic product (GDP). Spending even a fraction of these cash reserves on capital investment could substantially boost economic growth and employment.”

The UN’s International Labour Organization (ILO) commissioned the Inforum as part of its Global Employment Trends 2012. Using a dynamic replica of the United States economy, researchers forecast that spending the entire reserve of $508 million would reduce the unemployment rate by 1.5 per cent, create 2.4 million more jobs by the year 2014, and increase United States GDP one per cent in 2012, 1.5 per cent in 2013, and 1.6 per cent in 2014.

Another projected option is the creation of an Infrastructure Bank, where corporations could invest their money to be used for infrastructure investment projects.

For more information, visit http://www.redorbit.com/news/business/1112476819/excess-corporate-cash-could-create-2-4-million-jobs/

February 17, 2012


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Kevin Plank, co-founder of Under Armour, is an alumnus of UMD's Robert H. Smith School of Business.