Minnesota's largest companies flush with cash, but jobs impact small

Many of Minnesota's Fortune 500 companies -- like their peers across the country -- are sitting on lots of cash.

That's led some big companies to feel bullish enough to add jobs. St. Jude Medical, for instance, has about a half-billion dollars in cash and plans to hire about 200 people in Minnesota this year.

Spokeswoman Angela Craig said the medical device maker needs workers for the businesses that are doing well.

"We're managing a number of growth drivers at St. Jude Medical and that leads, typically, to more hiring," she said. "Primarily, we're hiring in our atrial fibrillation division and cardiovascular division in Minnesota."

But cash does not always translate to hiring.

Medtronic has some $1.4 billion in cash -- nearly three times St. Jude's horde. The Fridley-based company recently announced it will cut up to 2,000 jobs amid disappointing sales.

Minnesota's Fortune 500 employers, with their enormous workforces and resources, have the power to add or cut large numbers of jobs in Minnesota.

Mathematically, the $40 billion that Minnesota's Fortune 500 firms are holding could pay one year's median wage and benefits for hundreds of thousands of Minnesotans.

Steve Hine, the state's chief labor market analyst said big employers -- including cash-rich Fortune 500 firms based in Minnesota -- aren't exerting any out-sized influence on hiring. In fact, Hine said that when it comes to adding jobs, "the balance is tilted somewhat towards those smaller employers at present."

As it turns out big firms, prominent though they are, don't have that much clout on total employment in the state.

Only about 10 percent of Minnesotans work for big private-sector firms with 1,000 or more employees.

If those large employers were to increase employment by 10 percent in Minnesota, it wouldn't come close to the number of jobs added if smaller private-sector employers ratcheted up hiring just 2 percent.

And just because a company has lots of cash doesn't mean it should be expanding and adding jobs. Many companies remember how they were caught short of cash during the recession.

"Overnight, it just disappeared on them," said Diane Swonk, chief economist for Mesirow Financial in Chicago.

She said that as corporate profits rebounded, companies built up their cash levels, worried that a credit crunch could come again.

Now, there's growing pressure for companies to do something with their cash, Swonk said.

"Investors have gotten mad at them," she said. "Institutional investors with a lot of power are saying either redeploy those funds or give them back to us in the form of dividends. Big pension funds ... they're getting in there and saying give us back the money or grow your company."

Scott Anderson, an economist with Wells Fargo, said he believes companies are ready to spend some dough on growth.

"That money will be deployed more aggressively towards hiring and capital spending in 2011," he said.

Things are looking somewhat better for job seekers. Help wanted ads in Minnesota in January were up about 50 percent from January 2010. And job vacancies in Minnesota in the final three months of last year were up 30 percent over 2009.

Swonk agrees hiring is picking up but said, "there just isn't the need to ramp up like you would in a more V-shaped type recovery. Even if we were to triple the pace of hiring in 2011 that we did in 2010 net hiring we'd still be more than four million jobs in the hole from the recession."

The situation in Minnesota is no better. State officials predict it will take 2 more years before the state has regained all the jobs lost during the recession.