Why Corporate America Isn't Hiring

I've heard it. You've heard it. It's the rallying cry of businesses across America. Companies can't hire because business is down, down, down. Sales are in the dumps. Customers have left town. Business just isn't what it used to be. That's why unemployment is nearly 10%.

I bought this narrative for a while. But then I looked at the numbers. And I realized it was mostly hooey.

Consider this. Revenue for S&P 500 companies was more than one-quarter of a trillion dollars higher over the past 12 months than it was in 2007, when business "peaked." It's similar for the 30 Dow Jones industrial components: over $30 billion more in revenue this year than in 2007. Ditto for Nasdaq components: Revenue was nearly $300 billion higher over the past 12 months than in 2007. That's a 15% gain. Same story for the Russell 3000 Index: Revenue is more than $400 billion higher now than it was three years ago. Some depression.

Oh, and corporate profits are at an all-time high, too. Not surprising given record revenue.

Maybe revenue and profits are up only because corporations derive so much business from abroad, in regions with booming economies? Maybe. But there are other measures of purely domestic demand that show our economy isn't nearly as bad as some pretend. Real (inflation-adjusted) GDP is higher now than it was in mid-2007. Real consumer spending just hit an all-time high. You would never guess this by reading the headlines. But look at the numbers. It's the truth.

So what is really holding businesses back from hiring? A combination of factors. It really is a lack of demand for some industries. Skills mismatch is another reason. Labor mobility another. Population growth coupled with sticky wages another. Higher labor participation rates among older workers yet another. Several headwinds are working overtime to ensure unemployment stays high.

But with revenue and GDP at record levels while unemployment is off the charts, other, less measurable forces seem at play. I'll highlight two.

The first is uncertainty. Businesses are simply shell-shocked. They just underwent what Warren Buffett called an "economic Pearl Harbor." Even if business by the numbers is back to normal, business by the emotions is anything but. This is standard fare in cognitive psychology: Our view of the future is shaped by the recent past, particularly when the past was painful. There's a post-traumatic stress element that lingers long after business rebounds.

Then there's uncertainty over tax policy, impending elections, monetary policy experiments, budget reform, health-care regulation, etc. There are question marks aplenty hovering over the future. Businesses will tell you they're waiting for certainty before hiring.

Which you could also classify as hooey. There's always uncertainty. The future is never known. Most of what changes is simply our perception of certainty. Think about it: What kind of certainty are businesses waiting for? The certainty they had in 2007, when everything felt great? Maybe the certainty of 2000, when the future never looked brighter? I hope not. The reality is that genuine uncertainty and perceived certainty tend to peak at the same time.

The second element holding back hiring that I want to mention is labor productivity. Businesses' first response to the recession was to drastically cut payrolls; not just fat, but meat and bone. Labor productivity -- the amount of goods produced per worker -- went parabolic. Businesses figured out how to make do with less. A lot less.

A threat to the unemployed is that the bulk of these productivity gains remain permanent. Will businesses ever go back to hiring two people for a job they now know can be handled by one? There's a decent chance the answer is no. Berkshire Hathaway's (NYSE: BRK-A  ) (NYSE: BRK-B  ) Charlie Munger alluded to this last month, saying, "I just see business after business after business which has just rationalized so that it can do credibly in terms of protecting its balance sheet and its earning power while utilizing fewer people." And that has nothing to do with a lack of demand. It's just a new, more efficient way of doing business.

During the presidential election two years ago, Phil Graham, who at the time was John McCain's economic advisor, sparked tremendous criticism when he said the nation was suffering from nothing more than a "mental recession." He was dead wrong at the time, because demand was falling off a cliff. But with the exception of jobs, his comment would be, I'll dare to say, mostly right today. In many ways, we have a jobs crisis not because of a lack of demand, but because we're suffering from a mental recession of fear and uncertainty.

Disagree? Fire back in the comments section below.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel owns shares of Berkshire. Berkshire Hathaway is a Motley Fool Inside Value recommendation. Berkshire Hathaway is a Motley Fool Stock Advisor choice. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 26, 2010, at 12:59 PM, CPACAPitalist wrote:

    Nice article. I find it an interesting debate when discussing whether or not companies become more efficient (accomplishing two jobs with one employee) is a good or bad thing. On one hand, those people who previously held the now obsolete jobs our unemployed, with a skill set that may no longer be in high demand. On the other hand, companies are more profitable, which generates benefits for remaining employees and investors. While painful, I believe increases in efficiency are a good thing. Would anyone argue that the invention of the computer was a negative because it put typewriter repairmen out of work?

  • Report this Comment On October 26, 2010, at 2:14 PM, Borbality wrote:

    i wonder what happens when/if unemployment benefits run out. Or if voters force some sort of welfare reform. Talk about supply and demand!

  • Report this Comment On October 26, 2010, at 2:59 PM, slpmn wrote:

    Illustrates a big difference between Japan and the U.S., and perhaps a big reason why we aren't doomed to follow in their footsteps, economically speaking. In Japan, the corporations would do their best to avoid laying off the second worker, thus keeping a lid on unemployment, but sacrificing efficiency, and stiffling future growth.

    Its a trade-off, and reflects the difference between the two cultures. I'm optimistic that, in the U.S., the surplus of workers will pass through the system like a pig through a snake. In the end, we'll have leaner, more efficient companies that can dedicate resources towards innovation rather than bloated payrolls, and a retrained, more flexible workforce that can adapt to changing realities, and find jobs in the industries that will lead the way in the next economic boom. That's my hope, anyway, and a pretty good reason to be bullish.

  • Report this Comment On October 26, 2010, at 4:43 PM, devoish wrote:

    I would love to see GDP - a measure of dollars - compared to sku's sold (inflation?). I would also like to know how much of those earnings are the result of tax write-offs.

    And I think the most attention should go toward "lack of demand for some industries". Obviously car sales at 12mil/year vs 16mil is a dent. Housing.

    Yet the banks, lenders for car purchases and homes are profitable? Ok...

    Lots of unanswered questions here.

  • Report this Comment On October 26, 2010, at 4:56 PM, mrwizard555 wrote:

    BEHOLD! I really don't need somebody to do that job we used to think was essential.

    years ago, it was easier to hire a clerk to do some of the mundane number crunching tasks. the programmers wanted some ridiculous number of man-days to get the mainframe to crap out some numbers. a low paid clerk could take two IBM runs and divide column A by column B and stuff it all into a Lotus spreadsheet.

    now, people on the shop floor enter the numbers just like always, but now into a spreadsheet already set up for the data. no programmer and no clerk.

    even for direct labor(the folks who actually make the product), overtime is cheaper than new hires, up to a point. there are also a zillion temps available. temps are even better from a recruiting standpoint. you get to screen in the good ones. once you do make a hiring decision, zero training is needed.

  • Report this Comment On October 26, 2010, at 5:30 PM, pollypeach wrote:

    Absent from the article and comments is the impact on the workers who haven't lost their jobs. I "left" my job at an Ivy League university last week at age 51, after ten years, having been told I could stay if I was willing to work for half my salary and take on additional responsibilities. Layoffs and budget cuts are taking a severe toll. The staff who remain are grateful to have jobs and are rising to the occasion, but they are also struggling (unsustainably, in my view) to keep up with the workload. Cutting meat and bone isn't a threat only to the unemployed, but also to the employed.

  • Report this Comment On October 26, 2010, at 5:55 PM, CPACAPitalist wrote:

    With tuition so rediculously high maybe all university employees should take pay cuts and work more - so we can get education expenses down to a reasonable level - otherwise we are doomed to be led by an uneducated populace which votes to entitle themselves without knowledge of the reprecussions.

  • Report this Comment On October 26, 2010, at 6:02 PM, aeropater wrote:

    The fear is real. Small business is terrified of recent and projected changes in the way government requires them to run their business. These requirements may be only perceived but perception is reality to these business owners. ??Why hire/expand if it will result in increased regulation??

  • Report this Comment On October 26, 2010, at 6:12 PM, investmentcafes wrote:

    Add in the Illegals.....hmmm..

    11 million...having babies...and using our Healthcare...FREE...add in OBAMACARE....bills yet to be forced upon companies ...that is an expense...and thus forcing employers to weigh hiring vs new Healthcare costs...or losing employee's becuase costs are going up in Healthcare = obamacare...and less Private insured more on Government healtchcare...

    How much money do Brazilians in my hometown send back to Brazil...working at local convienince store..the mom w/ lock key baby,born here with Illegal daddy...claims "WIC"...social program..for Americans..but abused by Illegals...so the Dady..works under the table...taking an Americans job...then the kicker.? guess where he sends his money.? see it 100's of time a week...they buy Money orders and send the money back to Brazil...why..10% Bank interest RATE...so not only he takes a Job...then sends the money to support a foreign economy...thus the GDP here gets lowered...becuase that money isn't spent here...he never gets taxed....except maybe Sales taxes...but the bulk of..$500-1000/Week goes overseas...mulitply that by..2-3 million who do it per week....that's..1% ESt off USA GDP....hmmm...

    So why is OBAMA doing nothing...? more Votes to continue this SCAM...if he cared he wouldn'tr file against Arizona....even the Chief of police here did away with the Federal illegal Tracking program..saying he didn't want to lose the Trust of " The People"...Unionized police doing nothing ..why would they..the town's downtown buisness's...are 80% Brazilian...they don't even speak english...

    Add in the fact's that Housing is a mess...the lower end of the total manpower jobs/Scenario IS affected by the Illegals......doing nothing about them as OBAMA/Democrats are is hurting Americans...for votes...!!!!thats beyond words...

    So the housing mess..whereby a lower paying worker would RENT..then put a downpayment..on a house Is Affected becuase the Illegals...are here jacking up rent,Food,Energy..Insurance..ETC...and making it nearly impossible for the lower paying American worker to SAVE for a home..vs live paycheck to paycheck....Oh and Obama...the mess you claim you inherited was created by 8 years of Democratically controlled congress..nice try at spinning that....And can someone explain what the "FINREG" bill will do to Employers.?...gotta figure 60 sub-comittee's studying..banks/Finance/Regulations..will hurt not help Buisness....

    Imagine BEN..Bernanke...is you raised interest rates to 3.%,gave American a place to save...and thus Recapitalize the banks as is normally done...

    Happy Trails

  • Report this Comment On October 26, 2010, at 7:04 PM, waditude wrote:

    I largely agree, but I want to distinguish between two types of labor productivity. The historical one is when more efficient systems and technology increased worker output per hour worked. I think what we are seeing now is something else. Workers that still have jobs are running scared. Salaried employees are working longer hours and wageroll workers are working harder, not more efficiently. This type of labor productivity is only a cause of stress and poor health, not anything desirable.

  • Report this Comment On October 26, 2010, at 7:43 PM, GetMeTheBigKnife wrote:

    American capitalism can be harsh. Efficiency benefits businesses and government, so what do the displaced workers do? What does a great society do to keep things in balance? Some, but not all are capable or interested in starting their own businesses. Capitalism needs balance. Our poverty rate is growing... and that's about real people, not just figures in academic theory or statistical models.

    Even those receiving welfare and unemployment support the economy - they're spending their money. They purchase consumable goods. There's no room for hoarding cash. The money they get goes right back into the system. In that way, social programs support the broader capitalistic system. Sure, those programs could use more efficiency. But I thought I'd throw that perspective into the discussion. We've got to figure out a good way to keep the money and goods moving at all income levels. I appreciate everyone's views.

  • Report this Comment On October 26, 2010, at 9:18 PM, OldCountryBuffet wrote:

    I read these responses and the article. The author is correct. Companies are getting along with less people.

    However, everyone I talk to is exhausted and tired of working 400 to 800 hours of overtime a year. Some are even working more.

    I've seen many people turn to contract work or change an employer in an effort to start over.

    The companies that aren't hiring are beginning to suffer the ire of employees feeling taken advantage of by their employer so a handful of executives can get bigger bonus' and more stock options.

  • Report this Comment On October 26, 2010, at 9:34 PM, DDHv wrote:

    After we experienced being laid off, we worked out some things that we could do for ourselves. Backyard garden, food preservation, house modified for renewable energy, study, etc. With today's intensive gardening, an amazing amount can be grown, and the biggest expense is the labor. Now that we are retired, about a fourth of our social security is going into investments of one sort or another, and we are living quite well, thank you. At present there is no need to draw on the investments - maybe if we get health problems later.

    The Mother Earth News magazine is a good information source for anyone interested in some possibilities for living within your means.

  • Report this Comment On October 27, 2010, at 12:00 AM, Ruleoflaw wrote:

    Current increase in real GDP (IF any) must be due to disinflation/deflation, and for that reason and others, GDP is not indicating a robust recovery of the U.S. economy: living standard, employment, consumption, etc. [Compare to Chinese 8-10% growth]. Unless you are a government employee/retiree or a youth with ability and (overseas) MObility, the future is dim in the U.S. Until the self-serving socialist government elites are repaced, we will continue to sink into third-world conditions.

  • Report this Comment On October 27, 2010, at 12:26 AM, holosys wrote:

    I have worked successfully in corporations all my life, since 1976 as a teen working for Ross Perot. The trouble now is the past at long last coming home to roost in the God forsaken present. Corporations could get by with about a third (maybe less) employees. The other two thirds were tax deductible luxury items viewed no differently then fancy copiers that costed a fortune to lease, just sitting there until a new proposal or contract came in -- then used briefly AND their cost justified.

    Somewhere between 2000 and today, tax and other economic incentives for employing those two third dissolved into the nothingness here and now. Apparently corporations simply don't care about tax and other incentives, or unknown to all of us, a major change occurred to make seating warm bodies in cubicles an unattractive proposition.

    The truth will shock many that corporations never needed more than a third, perhaps a lot less, of the employees they paid over the past 30 or more years. Unless the government gives corporations some serious tax and other economic incentives to embellish head count, expect 10% unemployment to be a nostalgic figure from the good old days of the early 2000's. Expect unemployment rates to soar to levels rivaling Britain and other parts of Europe, perhaps more to balance decades of paying people to sit there and look busy (with clever ways to convince them that they ARE busy when it was all a ruse to justify keeping people on the payroll).

    I hate to be the messenger of bad tidings but it's downhill from here to the twenty-second century. Now is the time for those still employed to figure out their "Plan B."

  • Report this Comment On October 27, 2010, at 9:58 AM, LegalizeMe wrote:

    Capitalism is just like natural selection. You either adapt to the changing economy or you become irrelevant/extinct.

  • Report this Comment On October 27, 2010, at 11:04 AM, ilovesumm wrote:

    Thats a good thing. It will allow us to be more productive and competitive globally. Labor will migrate where need like water flowing .

  • Report this Comment On October 27, 2010, at 11:18 AM, IBJAMMIN wrote:

    I'd be willing to bet that employment goes up AFTER THE ELECTION! Most business men and women are Republicans. The longer unemployment continues the worse things will be for the incumbent Democrats in Congress. Remember how gas prices mysteriously came down leading up to elections during Bush's second term, then went up immediately after the election. These are not coincidences. If I was a serious Republican and could cause this effect, I'd probably do the same. Both parties are more concerned with being in power than they are with the well being of the mass of citizens in the country.

  • Report this Comment On October 27, 2010, at 12:15 PM, Hawkelady22 wrote:

    I can understand companies wanting to and become more efficient. Basically that's good business. But, what I've seen happening is the average employee is bearing the brunt of the burden. The average blue collar worker is now being required to take on at least two jobs, and in some cases three or more. Set aside the fact that their wages don't reflect this added responsibility. The burden of this excessive responsibility increases the workers amount of time required to even partly fulfill the jobs new requirements.

    When companies cut the meat and bones of their workers they are losing employees with histories of their product lines, services and production processes. In the short term it may seem temporarily cost effective, but I think in the long term these companies will suffer.

    Secondly, employees are working scared! They are trying to keep the jobs they have and I've seen where some are working 50, 60, 70 and more hours a week just to keep their heads above water. These employees are not more efficient workers, they are extremely stressed both mentally and physically. Eventually they will become burned out and develop more health issues due to long term stress.

  • Report this Comment On October 28, 2010, at 2:02 PM, TheDumbMoney wrote:

    Morgan, I really do love your series of articles about these issues, but I think you are missing a piece of the puzzle. You focus a lot here on the S&P and the Russell 2000, but you are missing the small business story. Firms with 1 to 100 employees employ (just going by memory here) at least 50-60% of all employees in this country. Maybe some make it into the Russell 2000, but not many. How are these firms doing? How are their profits? How do they react differently to uncertainty, perceived or real, than do larger companies? Or is there (as I believe) in fact always more uncertainty for small companies? What is their cash pile? The cash pile "corporate America" is sitting on has no bearing on these thousands of businesses or upon their millions of employees. For a brief look at how small business took a bigger hit and has recovered more slowly than "corporate America," see this link: http://blog.intuit.com/wp-content/uploads/intuitsmallbusines.... I would certainly like to see an article that more fully explores such issues -- or mabye you already wrote one and I missed it, I view you as reasonably objective and don't think you're trying to hide the ball or anything. Cheers.

  • Report this Comment On October 28, 2010, at 2:04 PM, TheDumbMoney wrote:

    In particular, see the chart on page two of the above link, for how small businesses dived more, and have not yet recovered from that dive.

  • Report this Comment On October 28, 2010, at 2:10 PM, TMFHousel wrote:

    "You focus a lot here on the S&P and the Russell 2000, but you are missing the small business story"

    That's why I also included real gdp and real consumer spending. Also, corporate profits nationwide -- all businesses, large and tiny -- are at an all-time high. I don't doubt that many small businesses are hurting. But that's always the case.

  • Report this Comment On October 28, 2010, at 2:14 PM, TheDumbMoney wrote:

    True, but if you're looking at aggregate measures like that, those can be skewed by large inputs from portions of the aggregage, in this case (potentially, anyway), the larger companies, no?

  • Report this Comment On October 28, 2010, at 2:16 PM, TheDumbMoney wrote:

    Maybe I misread your comment above, maye the second-to-last sentence was in fact saying that, separately, small/tiny business profits are separately at an all-time high. I was not aware of that if so.

  • Report this Comment On October 28, 2010, at 4:47 PM, FutureMonkey wrote:

    Nice article Morgan.

    Seems to me that much like real estate, jobs are local. Some states are experiencing boom times (North Dakota, Nebraska), others were better prepared for a rainy day (Virginia), while others suffered whiplash (Florida, Arizona, Nevada, California) and others just extend their suffering (Michigan, Ohio). A nationwide figure is hardly reflective of reality on the ground for most businesses and most job-seekers.

    Additionally not all job sectors were equally effected. Clearly construction and businesses directly related to real estate suffered the most. These jobs aren't coming back anytime soon.

    So, my question is: What sectors added the most jobs during the 2002-2007 period? What sectors lost the most in 2008-2010? And what are our expectations going forward. Perhaps it is unrealistic to expect resurgent hiring because the contraction was in businesses unlikely to rehire and other sectors are growing at the same rate they were before the recession.

  • Report this Comment On October 28, 2010, at 7:06 PM, fantoozler wrote:

    There are arguments against the structural unemployment (aka skills mismatch).

    From http://rortybomb.wordpress.com/2010/10/20/what-conclusions-c...

    What jumps out for me? College educated 20-24 year olds have the highest percentage increase [in rate of unemployment between 2007 and 2010]. This should hit against a structural unemployment story, as college educated people have the ‘freshest’ skills and incredibly high mobility.

  • Report this Comment On October 29, 2010, at 1:15 AM, ChrisBern wrote:

    To me there's an element of jobs that won't come back to Americans until Americans are willing to work for less money than they currently do-- to be more globally competitive with regards to wages, particularly for unskilled positions. After all, American companies that are growing and hiring, the Apples of the world, are simply hiring somewhere else than here. But they are hiring.

    Why would Apple hire an American factory worker at $10-$15/hour when they can hire a Vietnamese factory worker at $2/hour? People may scoff and say that $2/hour is not a "living wage", but the scoffing isn't going to be enough to convince Apple to keep the jobs here.

    My argument only applies to international companies, of course. Pure domestic companies are likely not hiring because they don't perceive near-term growth that would require extra personnel to cover. You hire when you see growing demand and you want to get ahead of it. After the 99ers run out of benefits and state/local governments get done with layoffs to meet their budgets, PCE is going to take a pretty decent hit--stalling any small recovery that we've had. Oh and don't forget hits to PCE as people's houses go further underwater--now that the tax credit is gone, we're already seeing housing prices gradual falling again.

  • Report this Comment On October 29, 2010, at 1:41 AM, burrowsx wrote:

    You have it backwards. Unemployment is causing uncertainty on the demand side. Consumers are not buying at the retail level. While the financial markets are making out like bandits, the consumer economy is shell-shocked.

    In the mean time, the Fed and Obama have supplied enough liquidity to wallpaper over the toxic assets on bank balance sheets, but the losses from the toxic assets not yet booked still raid the reserves available to lend to small businesses. Unless and until the Fed requires an accounting of the toxics, the economy will remain in limbo.

  • Report this Comment On October 29, 2010, at 9:57 AM, TMFHousel wrote:

    "Consumers are not buying at the retail level."

    Real consumer spending is an all-time high. If they're not buying now, they've never bought before.

  • Report this Comment On October 29, 2010, at 1:25 PM, lw67 wrote:

    If Corp. are in bed with GOP it makes sense that they would hold down hiring until after elections. Could CEOs be that unamerican (probably) they might think their paycheck gets larger with less regulation and ability to screw consumers. I have a non trusting issue when it comes to the greed of CEOs. No doubt the rich get richer under the GOP but the TRICKLE DOWN will come to those below. YIPPEE!!!! YOU FIGURE IT OUT. VOTE YOUR POCKETBOOK.

  • Report this Comment On November 01, 2010, at 12:06 AM, Oldfool103 wrote:

    There are a couple of comments that exactly echo what happened when the lumber companies submarines the then left wing provincial government in British Columbia. Bingo. With artificially low royalty payments booked in the 4th quarter, they were able to drive the government into an unexpected deficit and the right wing mopped up.

    It is not hard to see how the current stand on off-shoring by the CoC is diametrically opposed to their ads about unemployment. It is your country, although it has a profound effect on mine, as well. If you prefer to quadruple the street dwellers, even as houses sit empty, enjoy your life and all of crime and hardship you will be fostering. Otherwise, we all have to take a hit to bring those jobs back to our continent. (It seems to me there is something in the Preamble to the Constitution about promoting the general welfare, is there not?) Do nothing and there will be an entire generation lost to higher education, just when the Boomers need them to be fully employed. Perhaps we will have to fill rusting ships with our children and grandchildren and ship them off to India for those jobs.

  • Report this Comment On November 01, 2010, at 3:26 AM, TaigaTaiga wrote:

    It looks more to me like the major corporations are retrenching and preparing for the inevitable time when American wages reach parity with those of communist slave states like China and Vietnam and authoritarian slave states like Indonesia. They are sitting on their money, working the Cratchits to the bone, and the executive class is giving themselves a helping of insulation from the new economic reality. In the meantime the banking and finance sector is inextricably entwined with government and government-like entities in a corrupt death spiral-foreclosures, mbs/cdo instruments and so on.

    The big excitement will come when the populists decide as they inevitably will that Wall Street and Big Banking need to be brought down a notch. This will come from the right as soon as they figure out a reason the Tea Party can agree on. France's recent upheavals will look paltry by comparison. Buy Xe stock.

  • Report this Comment On November 01, 2010, at 2:39 PM, justnozy wrote:

    I am in agreement with Taiga Taiga and Oldfool103. Who do these large Corps. think they are fooling. Everyone knows that the economy needs consumers and products to create cashflow and wealth. I have been researching the F.S. of some of these corps and some are not making $ with from the sale of their products. Their wealth is increasing by other means, i.e. selling assets, decreasing their expenditures, reorganizations, merging with other companies and takeovers etc. They are trying to keep funds from the masses. Taiga T is right. It could come to "taking it to the streets" with the unemployed Americans. If that happens, everybody suffers; including the government. If I were Corp America, I wouldn't push the average American to far. Americans are not known for tolerance.

  • Report this Comment On November 01, 2010, at 10:33 PM, tenthgrade wrote:

    Wow, alot of interesting and often serious responses about this jobs/ unemployment issue. But I'm just in the 'tenth grade' - not literally, but let's just say that I 'm trying to think like a reasonably clever tenth grader and would like to be persuaded by things that make sense and that I can understand.

    So I start with a simple question. What would the world look like if there actually was 'full employment'? Well, let's just start with the US or maybe just North America. What if every able body with a need or desire to work was 'given' an appropriate job with a 'living wage'. (OK, there are some things here we need to define, but let's just look at the question as a whole).

    Where would these jobs come from? Who would provide them? Would they all require a 40 hour workweek until age xx? What is the age 'xx' when we are asked to retire? What happens after that? Can we hire, say 4 people working just 10 hours a week so that everyone is 'employed'? Where does the money come from to provide a 'living wage'? (Remember, we're looking for 'full employment', right?)

    That's just a start, but you get the idea. Nobody KNOWS how many people can be employed in today's society and 'make a living' (not be on welfare). We haven't even tried to GUESS. Maybe it would take shorter hours. Maybe it requires a lower 'standard' of living wage. And obviously the answers might be different according the type of work, skill, experience, and perhaps some measure of 'job worth' (i.e., some jobs may be 'worth' more to a functioning, productive society than others that are even frivolous or at least non-productive).

    Lots of social issues we can begin to talk about. What happens to the 'social contract', if there is one - or what should it be in today's society? What is the proper role of the innovator, inventor or entrepreneur? How do we factor in the role of broker/ agent or (horrors) the investor?

    It seems to be a political mantra to look forward to 'full' employment, to replace the jobs lost to productivity gains from computers, robotics and just plain office efficiency. Not to mention the imbalance of overseas wages. But it just might be the case that these replacement jobs do not and never will exist. Unless, of course, we are willing to have a national and international discourse on the implications and to consider what I'm calling the 'social' changes to our economic models and in our civic culture as well.

    Before you run me out of town, please help me understand the goal of full employment.

  • Report this Comment On November 04, 2010, at 12:30 PM, GetMeTheBigKnife wrote:

    As a supply/demand issue, businesses have more hiring leverage when unemployment is high. The business world does NOT want zero or low unemployment figures.

    Full employment would be an employer's nightmare as the applicant has very high leverage. Competition for jobs would be high, wages/salaries go up, business profits go down (large and small businesses).

    Seems that a moderate level of job competition (i.e., unemployment) like at 5% is healthy and stimulating to the economy. What do you think?

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