Thursday, December 31, 2009

"Jobless Recovery": Your Interpretation...and Mine

Yesterday I told you about an NPR radio show, where comments were made about the "jobless recovery." Three observations were shared, along with the traditional, conventional interpretations, which I shared with you. I asked you to examine the statements and asked you to come up with some of your own.

Here are the statements and follow up questions:

1. Economists are reporting positive indications of an improving economy, while unemployment statistics are still grim, leading to the term "jobless recovery". If the economy is improving, why are few or no jobs being created?

It's expensive to hire someone new. Did you know that it costs an employer 38% over and above an employee's salary to provide benefits? That's expensive. Companies don't want to commit that kind of money when they don't have to. Unemployment insurance is becoming more expensive. That's another cost. And for many employers, there are additional headaches that come with bringing on new employees. Once an employer has hired someone new, it becomes difficult to let that person go -- legally and financially. These are just some of the disincentives for additional hiring. But there is another reason.

According to an article in the Chicago Tribune, this country has lost 1/3 of its manufacturing jobs since the year 2000. Those jobs have moved offshore -- and they are not coming back.

The good news is that there is plenty of work that needs to be done: it's just getting packaged up differently. Fewer jobs, plenty of work. Why? Because jobs are devolving into projects. There has been an astronomical rise in the amount of project-based work that's available in the marketplace, upwards of 50% of work available.

The good news is that jobs, which we measure, aren't being created, but projects are. Let's start taking stock of project-based work. In America, work has always meant having a job. Maybe we need to start thinking differently about work in this country.

2. While some people are getting jobs, the long-term unemployed (defined as being unemployed over 6 months) are having the toughest time finding jobs.

My take? Because the jobs -- and specifically, the types of jobs -- we are losing are not coming back. Those factory line jobs, from Detroit to Dubuque, are not coming back and those who lost their jobs 2 years ago are still not able to find part-time or project-based manufacturing work. When the green jobs movement gets traction, this statistic will change as folks get retrained.

3. Statistics point to a surge in temporary hiring, and that this surge is used as an early indicator for rising employment.

Conventional wisdom says that a surge in temporary hiring is a predictor for the creation of new jobs as employers take on new workers on a trial basis, with the intention of moving them to full-time if they "prove out." I disagree. I just don't see the incentive for companies, big or small, Fortune 500 to mom-and-pop, to hire full-time workers in packages called jobs. Why should they create jobs when it is so easy to to hire "just-in-time-workers" on a temporary basis?
This surge in temporary employment is consonant with the rise in project-based work.

Your thoughts?

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