Carlton Guthrie sees bright times ahead. After weathering the 2001 recession, his manufacturing company has made enough money to pay off debts and position itself to expand.
Still, he's not planning to add jobs.
"I don't see us hiring anytime soon," said Guthrie, co-chairman of Detroit Chassis, which makes chassis for motorhomes. "I see tremendous amount of room for us becoming more efficient."
Guthrie's ability to expand his business without enlarging the payroll - a feat achieved by many executives across the nation - helps explain why job creation continues to be sluggish even while the economy appears to be booming.
The U.S. economy grew at a brisk 4.4 percent clip last year, but the number of jobs recovered to the levels of early 2001 only last month. Today's job growth is more than twice as slow as it was after the 1990-91 recession, and slower than during any recovery since World War II, analysts say.
The disparity fuels a growing debate about whether such low employment growth is a harbinger of a world in which businesses can rake in increasing profits without trickling much of it down to workers.
"Until now, this recovery has been all about businesses," said Mark Zandi of Economy.com, an economic research firm in West Chester, Pa. "Businesses are in about as good a financial shape as I've seen them."
Instead of aggressively adding workers, corporations have been buying labor-saving equipment, banking cash, distributing record dividends, buying back stock or undertaking ambitious mergers that often lead to job losses.
Reasons for these choices have wide range. Manufacturers such as Guthrie are pinched by price competition and are required to continually cut costs.
Other executives are wary about expanding payrolls in a time of ballooning health care premiums. Companies are cautious about bloating their staffs, remembering the still-fresh excesses of the late 1990s. Also, "offshoring" seems cheaper than paying American salaries.
The high level of corporate profits and cash leads many analysts to forecast that more jobs inevitably will be created.
History shows, they argue, that excess cash eventually is spent, creating opportunities for workers. The last time the country fretted about a so-called jobless recovery was during the early 1990s - just before an avalanche of employment stemming from the tech boom.
Another important factor that may lead to more job growth: slowing gains in productivity. Companies have squeezed just about all they can out of existing workers through labor-saving technology and efficient management practices, analysts say.
To see how businesses hold back hiring, analysts say, just look in their bank accounts.
Corporations are sitting on $4.7 trillion in liquid assets, according to a survey by Treasury Strategies, a Chicago-based company that studies business liquidity. That's well above $3.6 trillion in 1999, but down slightly from the $5 trillion high in 2003.
As much as 30 percent of the money and cash equivalents now is invested in instruments that will mature in one year or more - a sign that cash will remain stashed away a while longer, said Tony Carfan of Treasury Strategies.
"There is a lot of cash out there," said David Huether, chief economist with the National Association of Manufacturers. "Profits have picked up a bit, but I think that firms still are a little conservative in terms of expanding plants and equipment."
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