I last wrote on unemployment in a March post, so when the latest numbers came out last Friday, I realized that it was time to address the topic again (and to once again forego writing about staffing software!).
The numbers, which reflect the U.S. job market in April, are rather confusing at first as two in particular seem to contradict each other:
-- Around 244,000 jobs were added to the U.S. economy in April 2011
-- April’s unemployment rate (9.0 %) was higher than March’s (8.8%)
How can unemployment go up when jobs are added to the economy?
In actuality, it can’t. The two numbers are, indeed, contradictory. They reflect two facts, however:
1. The Bureau of Labor Statistics (BLS) uses different surveys to come up with each number, and
2. Because a truly comprehensive survey of labor patterns is impossible, such numbers are approximations. Thus, the small jump from 8.8% to 9.0% could easily represent no change in the workforce.
So what should we make of the BLS numbers?
Like most analysts, I don’t find much to cheer or cry about. It’s clear that the employment situation isn’t going backwards, but it isn’t moving ahead with much steam either. The other numbers in the latest BLS release are similarly good and bad:
-- Good: the number of long-term unemployed declined by 283,000
-- Bad: the number of newly unemployed went up 242,000
-- Good: private sector employment was up, including jobs in manufacturing and hospitality
-- Bad: there was no change in construction-based employment
Other economic numbers are more encouraging. The economy is growing (although slowly), corporate profits are burgeoning, and stock and bond indices are rising (which reflect renewed investor confidence). Sooner or later, such numbers will translate into big employment gains. But why hasn’t corporate success translated into more full-time hiring by now? I had hoped we would have seen more such “translation” by now, but it’s clear that corporations are, by and large, holding back from hiring new full-time employees and using more temporary contingent workers to handle the slowly increasing workloads.
The answers I read generally coincide with the writer’s political biases – left-leaning commentators point their fingers at corporate greed and the squeeze on workers to produce more with less, while right-leaning thinkers blame economic uncertainty – caused by Washington’s policies, of course.
I lean toward a more pragmatic approach. Businesses are cautious, to be sure, but more because of the past recent recession than the uncertainty of the future. There’s nothing like economic hard times to teach executives to be careful with money and to research thoroughly before changing a corporate model that is currently profitable. And hiring people is a form of change. Executives, then, are building their cash reserves from the highr profits and not currently reinvesting those profits into growing their global workforce.
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