Magazine

Is corporate America the key to US job growth?

Media playback is unsupported on your device
Media captionThe Caterpillar plant has taken on 30,000 new workers since 2010

Politicians of all stripes talk about small business being the backbone of the US economy. But the vast majority of Americans work for large companies, and it is big business doing most of the hiring - and firing.

A bright yellow bulldozer cuts through the morning mist in a field in Clayton, North Carolina. On 34 acres of land surrounded by trees, Caterpillar tests the heavy equipment it makes.

The sight of these roaring machines is enough to make many a young boy's heart race faster. But that's not the only reason for excitement. Caterpillar is among the handful of companies now hiring as the global economy slowly recovers.

'A big relief'

Standing on the production line where he assembles Caterpillar's skid steer, compact track and multi-terrain loaders, Adrian Reaves, one of the heavy equipment maker's recent recruits, describes getting his new job as "a very big relief".

The facility where he works in Sanford, North Carolina is abuzz with activity.

There is a constant beeping sound from the forklift trucks as they move parts to different sections of the production line. Staff struggle to complete the orders fast enough before they are shipped to customers around the globe. Caterpillar's small loaders are only available from this single US factory.

Since the start of 2010, Caterpillar has taken on 30,000 new employees worldwide. Some 40% of those new jobs were created in the US. And some 325 jobs are being created over five years at the plant where Mr Reaves works.

After a seven-month job hunt he says finding employment was a big weight off his shoulders, especially with a wife and two children to support. It is a burden many other Americans are acutely aware of.

"When you are a parent and you have other individuals looking to you when they need things," he says.

"It can be a bit tough when you can't get the things they need, much less the things that they want."

Job generators

If big companies are hiring more workers, why is there the misconception that most of the jobs growth will come from small business?

Politicians love to trumpet the importance of small business, and these views inform policy thinking. President Obama's American Jobs Act is designed in part to help smaller companies.

Yet when you take a closer look at the jobs market, they may not deserve the credit.

"It's easy to take shots at corporate America," says Mary Bell, a Caterpillar vice-president.

She thinks that over time, a clearer picture will emerge.

"I think historically as we look back, big business has created the bulk of the jobs in either recovering economies or growing economies. And that is certainly true today."

The recent recession was triggered by an over-borrowing binge. Crawling out from under that debt burden is harder for smaller companies.

Image caption David Hornsby found a lower-paying job at Caterpillar after he lost his job

Big businesses bounced back faster. Profits at the Standard & Poor's 500 big companies jumped 47% in 2010.

With less debt, large firms are in a better position to hire following the recession.

And the reality is that most Americans depend on a pay check from large firms.

According to the Organisation for Economic Co-Operation and Development, the United States has the largest share of workers in big companies - defined as those with 250 workers or more.

So when big firms hire or fire people, it can have a big impact on local communities.

Community benefit

Seven miles from the Caterpillar plant is downtown Sanford, filled with small gift shops, boutiques and restaurants.

Inside Steele Street cafe on a sunny afternoon, a woman unfurls bright scarves and arranges them in a multi-coloured display. She's hoping to make a few sales to some of the cafe's after-work clientele.

Employment provided by nearby Fortune 500 companies is helping to keep this town vibrant.

"Instead of being a ghost town, we have stores that are open for business." says Cornelia Olive, a former newspaper editor who is now mayor of Sanford. She also appears to be on first name terms with almost all of the local store owners.

"You can see we have an active downtown here and that's because we have industries where people make the money to buy the products."

Yet for all of the town's southern charm and warmth, the truth isn't quite so pretty. The jobless rate in this state is above the national average at 10.5%.

Without large employers like Caterpillar, the mayor believes the situation could have been a lot worse.

"Of course our unemployment rate has skyrocketed," she says, "but it's better because the industries that we have here have been hiring."

Fragile hiring

And that is the problem.

Even though large firms are creating jobs in Sanford and in other parts of the country, it's simply not enough to put the 13.9 million Americans who want a job back to work.

For that there needs to be faster economic growth. But the Federal Reserve, America's central bank, says it expects economic activity to remain sluggish for the next few years.

Given the pessimistic outlook, it is hardly surprising that some people have accepted substantial pay cuts just to get back to work.

Caterpillar employee David Hornsby takes pride in what he does. He enjoys his work in bay 12 on the production line - the final stage before the loaders are sent out to customers.

Still, it is a far cry from his old profession, 20 years working in the utility industry, buying and selling power and monitoring the US electrical grid.

"I used to make a whole lot more than I do now," says Mr Hornsby, laughing ruefully.

"I was [making] over six figures a year, so this is a big change."

It is not just individuals like Mr Hornsby who are feeling challenged by these tough economic times.

With the outlook so gloomy for its domestic market, Caterpillar is selling more and more of its trademark yellow bulldozers and loaders abroad. Some 70% of the company's money is made outside of the US.

But far from being bad news for the company and its employees, such success is fuelling its investment in the factory in Sanford.

For Caterpillar vice-president Mary Bell, it only confirms her view that globalisation can be a friend to the American economy and American worker.

"Being a global player generates US or American jobs and American opportunities," she says.

Related Internet links

The BBC is not responsible for the content of external Internet sites