Have you ever had just too darn much cash? It’s annoying. Sure, you can stuff your mattress with fresh $50 bills, and use $100s for the throw pillows, but after a while you just get tired of stacks of $20s falling out of the closet every time you want to grab a sweater.
Now, this may not be a problem for the average person, but an awful lot of very large corporations are sitting on fairly astonishing amounts of cash. If we exclude banks from the S&P 500 — because cash, to them, is like inventory for other businesses — we find that 190 companies have more than $1 billion in cash.
The problem with cash for companies is that it’s really not doing much that’s useful. Even at current modest inflation rates, companies are losing money to inflation on their cash reserves. They can boost dividends, which makes shareholders happy, but once you raise a dividend, it’s very, very bad to cut it. They can buy back stock, but that primarily benefits the executive suite, who are generally doing pretty well already. And in today’s annoyingly anemic economy, many companies don’t have enough demand to warrant building new factories or stores.
What to do? They could give employees a modest bonus — say, using 5% of their cash reserves. A bonus is just that — you don’t have to do it the following year, as you would a raise. You could dole the bonus pool out as you see fit, or distribute it evenly as a way of thanking workers for the fact that the company has all that cash on hand.
Depending on the company’s cash stockpile and the number of its employees, the bonuses could be modest or extravagant. McDonald’s, for example, has $2.1 billion in cash and 420,000 employees. Each employee could get a $247 bonus. It’s not extravagant, but it would make a big difference to the average McDonald’s worker.
On the other end of the spectrum, there’s Gilead Sciences, which has $10 billion in cash and 7,000 employees. A 5% bonus pool could dole out $71,621 per employee. Heck, a 1% bonus pool could dole out more than $14,000 per employee.
What benefit does the company get? Happy employees are a genuine benefit to companies: They would have less turnover, and spend less in training and recruiting. And employees are likely to spend at least some of that money at the company they work for,
More importantly, employees would have spending money, and the economy needs more consumer spending. One of the big disappointments of Friday’s jobs report was the lack of wage growth. People are unwilling to spend money if they think that their hard work won’t advance them in life. Companies with lots of cash don’t have to spend very much of it to make their workplace better — or help to improve the economy.