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Why Companies Are About to Start Hiring

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Why Companies Are About to Start Hiring

Post by gigichicago on Fri May 06, 2011 10:43 am

I hope this is true!

In a nutshell, it's because they don't have much choice.

The bright spot in a drab employment picture is that workers have been stretched so thin during the past couple years that companies are going to have to (gasp!) hire more.

Stop slacking off!

You may be understandably suspicious. Corporate America has been raking in massive profits – they flooded in at a record $1.68 trillion annual rate in the fourth quarter of 2010 – with unemployment near 9%. Initial jobless claims are rising again after falling for much of 2010, yet the stock market is just short of record levels. Do companies really want to change this picture by hiring people and paying them and stuff?

The answer is they may have no alternative. The hiring picture is improving largely because the productivity gains that drove the profit rebound and the rip-roaring stock market rally of the past two years are petering out.

Hourly economic output rose at a 1.3% clip over the past 12 months, says Paul Ashworth of Capital Economics – down from 6.7% in the previous year.

While falling productivity growth is bad over a long span, because it means less wealth creation and slower economic expansion, in the early stages of a recovery it is unabashedly good news for workers -- something that has been in short supply of late, whatever happens with Friday's jobs report.

A productivity slowdown shows employers have harvested the low-hanging fruit of wage and employment cutbacks -- leaving those that aim to grow through the next cycle with little choice but to start staffing up.

"We suspect that firms just ran out of potential productivity-enhancing measures," Ashworth writes in a note to clients Thursday.

During the 2007-2009 downturn, companies not only shed jobs by the millions but also put the screws to workers who remained, forcing them to work harder, give ground on raises and benefits and, worst of all, stop mocking the boss' tie.
In the early stages of a recovery, this pressure eases as companies start thinking less about staying in business than about competing for a bigger share of the next wave of sales growth. This typically leads over time to a wave of hiring.

To say this last stage has been long in coming in this economic cycle is a major understatement. With 13.5 million Americans out of work and millions more working less than they'd like, there is no shortage of potential hirees.

Nor is there much of a sign restive workers are on the verge of demanding better hours or higher wages, unhappy as they may be about $4 gasoline. [id]=ULCNFB&s[1][range]=1yr]Unit labor costs, measuring the price of economic output, remain below their pre-recession level, and wages haven't risen faster than 2% since 2008. The first step has to be to get a job, after all.
"The fall in productivity growth is very typical in the early stages of a recovery, and gives us yet another sign we're in a hiring trend, as bumpy as it is at times," says PNC economist Robert Dye.

This is not to say unemployment is about to plunge and that happy days are here again. While a shift toward hiring will be well received by workers, it will squeeze corporate profit margins – a development that won't be well received by the stock market.

And if lower employment is surely necessary, it won't be sufficient to get the economy truly rolling along again. The biggest problem in the United States is the huge amount of debt weighing on household and government balance sheets, and you may have noticed we are not making a great deal of process on that front.
But for now, a little less cream for the fat cats is a price well worth paying for some more jobs.

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Re: Why Companies Are About to Start Hiring

Post by unemployed2long/1208 on Fri May 06, 2011 11:11 am

Ashame to waste all the space for that message the simple answer is no company is going to hire with gas prices causing the economy to slow down to unpredictable futures. And until gas prices drop to a comfortable level, all those jobs are NOT going to happen. Its a farst with the new job created at 244,000 for April I do not understand how Americans in 2008 when gas prices went thru the roof and set up the economic slowdown that put most of us where we are at today! What boggles my mind is OK, The gas prices are higher than they were in 2008 so are we in a uncertain lull and new jobs are or will be in limbo until gas and economy rebounds or is America finally going to accept HIGH gas prices and just whistle dixie and be happy. Doesn't make sense.
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Re: Why Companies Are About to Start Hiring

Post by Phillymg on Fri May 06, 2011 3:42 pm

The big corporations will start hiring Americans again (a little bit) because if the unemployment rate remains at 9% or goes even higher there will be riots in the cities this summer due to of lack of work.

As you have stated UE1208.....the small businesses are having to lay people off due to the high gas prices. Therefore the big corporations must take up the slack by hiring more people. They don't *want* to hire more American workers (they prefer hiring workers in China, India, & Brazil) but to avoid food riots they'll have to suck it up & do it.

The corporations' huge profits won't do them any good if the cities are burning down around them. They've been doing a dangerous dance to hire as few Americans as possible yet hiring just enuf Americans to keep the rioting from starting.

I can't believe the media is saying that 62,000 workers hired by McDonald's is a good sign. There were 1,000,000 people who applied. That means 938,000 people applied who didn't get hired including me.

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Re: Why Companies Are About to Start Hiring

Post by theend on Fri May 06, 2011 5:23 pm

this is a good truthful article Please read all the comments!

drug=whatever item - county=where ever is best at the time;contentBody

Awhile back Eton Corp posted record profits, I had posted here that they were mostly based in China, I later looked to try and find when they started moving there and found it was 1997

By the way the republicans are the only people that think we can drill our self out of the gas problem. Democtrats have pointed out many times to them that the US Dept of energy says it cant be done. They (democrats)want to open up the US Fedral oil reserve to fix the problem, Just like Bush did after katrina.Republican refuse to do it.
Its all about politics, trying to then blame Obama for the problem.The funniest part is amercans believe its obama. Its all just a terrible game people.

"I can't believe the media is saying that 62,000 workers hired by McDonald's is a good sign. There were 1,000,000 people who applied. That means 938,000 people applied who didn't get hired including me."
They are doing it because if everyone understood the truth of what was happening the riots would have already started.We are being told its 5 to1 unemployed per job, Those numbers show 15 to 1 unemployed per job

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