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Manhattan Institute Senior Fellow Diana Furchtgott-Roth on the factors driving the markets higher and the lack of job growth.
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-- -- -- -- -- -- I think reporting and a growing divide between companies and their workers.
Accordingly article companies are -- sky high profits but instead of hiring more employees and expanding they are choosing to sit back and put up their feet.
Just staring at their huge piles of cash littering the floor all around their offices.
So we're here to give -- the real facts and tell you what.
About this strike -- now is Diane birch -- rock she is from the Manhattan institute.
This one of those articles that you know like just I'm sort of screening of the newspaper by myself and office which doesn't make a lot of sense so -- let's so let's go through and sort of take it apart piece by piece and and and -- -- where I think being -- got wrong but maybe you disagree.
I want to start with.
Their basic thesis they say that the golf at what they're trying that is the divide between workers and their companies.
Explains why the stock markets are thriving.
Even as the economy is barely growing and unemployment remains stubbornly high in this -- other central thesis that sort of really stuck in my crop so to speak because reason -- the stock market is is on fire is because Ben Bernanke is just you know.
Why -- it -- it he's just expanding his balance sheet hand over fist as much as he possibly can.
And investors with money are forced into the stock market is the only way to reach for yield there are fundamentals behind it -- you think.
Exactly the Fed is just using up the economy that buying 85 billion.
A month in mortgage backed securities.
And in treasury bills and notes that's about as much as the one fiscal yes a quest and that's driving -- much it to new highs that keeping interest rates really know.
So people on fixed incomes anyone who wants any kind of -- ten has to go for more risky assets.
That is driving up the -- market.
And they also said that when companies do hire is often overseas.
We had big growth is and you know that's that's true to a certain extent but it's also the case that they're looking for employees here.
But they don't have the kind of skilled workers here in this country right now to -- -- -- have been we hear from people all the time we have CEOs -- of technology companies.
Who say they cannot find computer programmers and engineers in this country.
There are millions of jobs that are going.
They gain in those people exist overseas what effect.
Well that's true and also the -- many companies that markets overseas see you have China -- India growing at about 7%.
Last -- GDP growth was 110 of 1% say makes sense to put your factories -- your customers.
But plus.
Companies -- keeping about one point seven trillion outside the United States and not bringing it in because we have one of the highest corporate tax rates in fact be.
The highest corporate tax rate in the industrialized well.
35%.
Corporate tax and we tax companies on their worldwide income instead of just that demand picking come.
They also did say that while buoyant earnings are rewarded by investors make American companies more competitive they haven't translated into additional jobs at home.
For a lot of the reasons that you just that it makes -- -- your money overseas.
I wonder at what point do you ask maybe companies in America -- investing here in America because they don't believe the economy is real.
They don't believe that the market that is going up reflects the economy that's growing at a stagnant pace and they don't -- -- take the risk and Inco is after all.
Do you want to invest they do want to grow.
That's -- they make more money in the long run if they're not doing it.
It's not because they want to stare at their money in their offices that doesn't do anything for them maybe there's a bigger reason why do you think.
-- -- have to look at the difference between investment.
And employment.
So with the new cost of employment if you look at the 2000 -- -- -- welcome penalty.
Under the new affordable health care act if you don't have the right kind of insurance.
Companies are becoming more capital intensive and that's labor intensive just look -- drugs to us for example have a -- to self scanning machines.
Or parking lots they don't have these people in the told booths anymore you -- -- a credit cut in order to pay.
So one thing the increased cost of labor is doing is it means that increased investment doesn't necessarily translate as much -- -- increased employment yeah -- the capital labor ratio is changing.
That's a big problem and president -- has just proposed.
Increasing the minimum wage to nine dollars and upwards -- coming -- and yeah that's gonna make more people less employable -- United's it may mean that's just gonna hire people at high scale to take you so much and bring in our last segment and -- does the white people have to watch the whole show Diana thanks so much coming I think we appreciate you media coming up on my.
