Quick Thought on Jobs

I’m tired of hearing that the economy isn’t producing jobs because business lacks confidence in President Obama.  Yes, companies are sitting on a ton of cash rather than adding to payroll, but this failure to hire would be the same if Romney were in the Oval.

If England used to be a nation of shop keepers, the U. S. has become a nation of middle managers.  While it’s easy to calculate out how many people it takes to produce Fords on an assembly line, it’s not as straightforward to figure out how many people you need in cubicles writing reports and emails to each other.

As the economy has come back, a lot of jobs have been eliminated, as companies realized that they didn’t need all the people they had before the meltdown.  To some extent, they made bigger profits because people who kept their jobs were so grateful and terrified that they were willing to do a job-and-a-half rather than complain.  But remaining workers also found themselves able to get more done because meetings were shorter and there were fewer co-workers up and down the chain of command to deal with by memo or email or office visit.  Businesses realized that before the meltdown, they had a lot of employees who may have looked busy, but weren’t terribly productive.

When the economy tanked, our private sector was over-staffed, as we typically complain that the government is.  Companies that find themselves under-staffed are hiring (people doing a job-and-a-half won’t do that forever), but they won’t let themselves become over-staffed any time soon.  A lot of jobs are just gone for now, regardless of who controls Congress or the White House.

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3 comments on “Quick Thought on Jobs

  1. danielfee says:

    All true, but I think the overriding issue is reduction in disposable income for the working poor and middle class. We are a consumer based economy, with approximately 70% accounted for in the purchase of goods and services. Prior to the collapse a large portion of the spending was kept up due to cheap borrowing costs and private , as well as public debt skyrocketed. The housing collapse essentially eliminated new debt, people began paying down old debt which slowed new discretionary spending. With customer demand slowed business began sitting on their cash, and using it for “financial schemes” because there was no need to reinvest and expand your business and hire people if the demand is not there. There was no confidence that customers would come back in a significant way. It really had nothing to do with who was in the White House.

    • But even with consumer demand coming back, many businesses are realizing that they can make do and meet that demand with fewer employees. During the prosperity that preceded the meltdown, companies let their payrolls become bloated, and we had a proliferation of assistants to assistants and vice presidents of this, that, and the other thing.

      • danielfee says:

        True, consumer spending has come back some but nowhere near where it had been. With excess capacity it will take much more than a moderate increase for companies to do any significant hiring. They will hold off on adding employees as long as possible.

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