Nineteen Million Jobs For US Workers

The impact of channeling US$1.4 trillion in excess liquid assets.

Highlights of Main Findings

Starting with the financial collapse and Great Recession of 2008-09, the U.S. economy has been experiencing the most severe and protracted employment crisis since the 1930s Depression. As the employment crisis has proceeded, U.S. commercial banks and large nonfinancial corporations have been building up huge hoards of cash and other liquid assets. This study examines the impact on job creation of mobilizing these excess liquid assets into productive investments within the U.S. economy over the next three years:

$1.4 trillion in excess liquidity: Commercial banks are carrying a total of $1.6 trillion in cash reserves and the nonfinancial corporations are holding $2 trillion in liquid assets. After accounting for the safety needs of these businesses in a highly risky economic environment, we conclude that the banks are holding $1 trillion in excess cash and the corporations are carrying $400 billion in excessive liquid assets. This brings the total of excess cash held by the banks plus excess liquid assets held by the corporations to $1.4 trillion.

Credit market lockout for small businesses: As a corollary to the banks piling up cash reserves, smaller non-corporate businesses have experienced a massive contraction in the supply of credit available to them since the onset of the recession. Total net borrowing for these businesses has been in the negative since 2009.

Unemployment would fall below 5 percent by 2014: Approximately 19 million new jobs would be generated within the U.S. economy over three years if the $1.4 trillion in excess liquid asset hoards were channeled into productive investments and job creation. This would push the unemployment rate below 5 percent by the end of 2014. We document how this would create new opportunities for workers at all credential levels within the U.S. economy. We also show the regional benefits for both the Los Angeles and Seattle metropolitan areas.

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