Worries Mount Ahead Of Latest Employment Reports

  • Playlist
  • Download
  • Embed
    Embed <iframe src="http://www.npr.org/player/embed/129617753/129620929" width="100%" height="290" frameborder="0" scrolling="no">
  • Transcript

A lot of eyes are trained on the August employment reports due out Friday from the Labor Department.

In recent days, the markets have received signals the forecast is not sunny.

According to a private report this week, private employers slashed 10,000 jobs instead of adding jobs as anticipated. Unemployment benefit claims were down, but not by much. All of that means the unemployment rate could rise from where it stood last month, at 9.5 percent.

Economists anticipate that, once again, August will post a loss in government jobs, including temporary Census jobs. But the biggest cause for concern is that this month could show the weakest business hiring in months. Although the economy is technically a year into a recovery, that is not yet showing up in the jobs numbers.

Tig Gilliam, chief executive of Adecco Group, a staffing agency for both temporary and permanent positions, says businesses began steadily adding temps to their staff a year ago. Usually, that's a precursor to permanent hiring, but companies still want to be able to downsize if they need to.

"When I talk to Adecco Group clients, they continually focus on flexibility in their workforce, and the uncertainty in the recovery has even convinced them even more that that is a better route, at this point," Gilliam said.

Gilliam says many firms haven't met their internal benchmarks that indicate that their business has found firm footing — though that is not universally the case.

"The automotive sector was very hard hit in this recession," he said. "And we had quite a few clients who said. 'Once we see the pace of sales reach this, then we're going to open that extra line, or we're going to work a new shift on the existing line.' And those recoveries are actually playing out.

"The automotive component, the manufacturing sector overall, has begun its recovery and is well into it. That now needs to move over into the business and professional skills."

With about 17 million people unemployed or underemployed, Gilliam says his company gets far more job seekers than job openings. In some cases, he gets 100 applicants for every available job.

It is something of an enigma that jobs haven't come back yet. The Federal Reserve has kept interest rates near zero for more than a year. Congress and the administration have tried one stimulus program after another. Many corporations are making nice profits again and some people wonder: Why aren't they hiring?

"U.S. companies are not really having a problem. It's U.S. workers that are really suffering," said Howard Rosen, an economist at the Peterson Institute think tank.

He says the jobs are slow to come back because companies made themselves more efficient during the recession.

A hotel chain improved how it staffs up for peak times. A retailer is using a more efficient inventory system. Rosen says these are systemic changes that mean an increase in business no longer justifies an increase in hiring.

He also says global businesses are investing in other parts of the world, but that does not benefit the American worker.

"The answer to all of our problems is investment," he said. "We need to do more investment in productive plant and equipment here in the United States."

In a down economy, much of the public discussion has focused on stimulating demand for goods and services. That means finding ways to pump money into the hands of consumers who might spend it. But Rosen says that is short sighted.

"Stimulating consumption helped contain the recession, it's not going to help us in the recovery," he said. "In fact, it could make things worse.

"What we need to do is shift from consumption to investment in order to start the process of rebalancing the U.S. economy."

Rosen says investment in new production and technology is the only way to create permanent opportunities for workers. Other economists believe that the economy can, and will, heal itself over time.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.