02/07/2011 09:46 am ET | Updated May 25, 2011

Jobs Still Absent From Recovery

As the economy increasingly shows positive signs of recovery, one crucial piece lags: jobs.

After companies cut payrolls to boost profits during the downturn, they're now reluctant to hire workers again, the Wall Street Journal reports. Earnings have improved and sales are up, but many workers have yet to share in the bounty.

The worst economic downturn since the Depression has prompted many companies to hoard cash, to protect against losses. In the third quarter of last year, U.S. corporations increased their cash holdings by 7.3 percent, setting a new record with $1.9 trillion in liquid assets, according to Federal Reserve data. That's money they're largely not spending on workers.

While in this defensive crouch, companies in the S&P 500 index saw fourth-quarter earnings rise 28 percent above the same period a year earlier, the WSJ notes. Sales were up 7.7 percent.

Other signs, too, point to a recovery: Yields on Federal government debt have been rising in the past week, indicating that inflation may be creeping into the economy, the WSJ reports in a separate story. Investors rushed to put their money in bonds when economic prospects seemed grim, but now, bonds' popularity may be fading. The sharp rise in yields indicates the economy may be picking up steam, and it makes the long-term commitment of a bond less attractive.

But workers have largely been left out. The economy added a measly 36,000 new jobs in January. While the unemployment rate fell to 9 percent from 9.4 percent, that figure reflected a shrinking of the workforce, as many of the jobless gave up looking for employment. Nearly 5 million discouraged workers were left out of that 9 percent rate, HuffPost reported.

Even when companies' revenue fell in the wake of the recession, many were able to pull in profits by reducing their expenses. They laid off workers, and squeezed higher productivity from the workers who remained.

Now, with the recovering seemingly gathering strength, companies seem inclined to stick to these new practices. And with commodity prices high, companies may look to make additional cuts.

That's part of the reason why the recovery itself feels uneven. In addition, home prices continue to fall, eroding household wealth and making homeowners more vulnerable to default and foreclosure.

Homeowners' equity, or the stake they can claim in their homes, fell 2 percentage points in the third quarter of last year, according to Federal Reserve data. The drop ended five quarters of steady growth since the figure hit its all-time low in the beginning of 2009.