Excess cash

Bloomberg reports that U.S. companies are holding about $2 trillion in cash,  that the amount keeps growing, and it's not being put to productive use.

Their editorial is a discussion on what to do with all this cash: pay dividends, buy back stock, or make acquisitions.  It's an interesting view into the mindset of the financial world that there is no mention of one obvious use for this cash:  paying the companies' employees more.

Wages have been stagnant for the last 30 years or so, lagging behind the growth in productivity, with the result that "the broken connection between labor productivity growth and compensation growth for average workers has undermined mass upward mobility and the ideal of a growing middle class", as the authors of this paper note.

The rewards from the growth in productivity have gone mainly to the wealthy.  If I were asked, I'd say: share the increased wealth, that $2 trillion sitting around, with the employees responsible for productivity growth by significantly increasing wages and salaries.  Not only would it be the right thing to do morally, but would also put money in the hands of those most likely to spend it, and so give our lagging economy a boost.

The economy needs a stimulus: it doesn't have to come wholly from government.