Watch this interview on Bloomberg with Gary Burtless from Brookings and Bill Beach from the right wing Heritage Foundation to see a debate on the causes of our unemployment. For Heritage the problem is that corporate taxes and concern about future regulation are what is preventing our economy from improving.
But Burtless has a question in light of a couple of facts. Corporate profits as a share of income are at a 60 year high. Corporate taxes are near a 60 year low. Why would we conclude that less taxes and regulatory conditions that improve profits would make any difference?
And if future regulations are a concern, why not hire now in this low regulatory environment. If the regulations finally come that's when you scale back labor. You get while the getting's good.
The problem is lack of demand. Companies don't see that they need additional staff to meet demand and they don't see much by way of future demand. That makes sense. People are unemployed. People don't have spare money. If there were more demand then companies would hire. Instead they sit on their cash. That's rational.