By Sally Greenberg, NCL Executive Director
While visiting family in Minneapolis, I read an article in the Star Tribune about Minnesota companies piling up the cash and not spending it on hiring new workers or buying new equipment. This is written as the United States faces 10 percent unemployment. The piece was written with a cool remove – just reporting the facts. But there were numerous references to the impact of these policies – with an emphasis on how much the companies care about investors and paying dividends and such – with little or no concern about workers. On the list were Hormel ($288+million), Medtronic (nearly $4 billion), 3M (nearly $5 billion), and United Health Group ($11 billion)
And how did these companies amass the cash? In 3M’s case, it slashed 4,000 jobs, got rid of free lunches for employees, and banned merit increases. What did they do with all the money they saved? They’ve acquired three new companies for $2 billion. The biggest concern in making these investments is expanding the company – and ensuring rewards to investors. The article notes that “cash-rich United Health Group upped its annual dividend this year to 50 cents a share,” and “Target hiked its quarterly dividend to 25 cents a share.”
Yes, that’s important. But equally important is making sure that the workers in these companies aren’t summarily laid off or deprived of basic benefits like health care or decent 401k contributions, and that these companies realize that those who go to work each day for them, their loyal employees, are the capital that allows the company to amass its billions in reserves. And yet you don’t hear about the things the company is doing to shore up its workforce, boost morale, or reward performance that has lead to greater productivity. There’s something wrong with this picture, in my view, when investors become more important than the folks that keep the company going day to day. But I guess I’m naïve – clearly the authors of this article think the emphasis on paying bigger dividends and acquiring more companies is more important.