A spate of layoff and restructuring announcements has hit the airwaves recently, while hiring remains distinctly lackluster. Over three years into what the economists technically call a recovery, the employment market is listless and job seekers are frustrated. What’s going on?
Allison Linn of NBC News points to several themes that explain today’s job market and why companies are so reluctant to hire:
– They are uncertain
– They don’t have to
– Their business strategies have changed
– They are risk averse
The first two factors are related in large part to hopefully temporary phenomena – political wrangling and the weakness of the recovery. Ever since the passage of Obamacare and the resulting GOP takeover of the House of Representatives in 2010, the government has been in “kick-the-can-down-the-road” mode and has not faced up to hard decisions. Uncertainty about government spending and the tax code is bound to affect hiring, given the huge role government plays in business decisions. This in turn aggravates the weakness of the labor market, as companies try to get by without hiring. Productivity measures have ticked up sharply in recent years.
The last two are more structural and more ominous. We may have entered a new era of business decision-making where the consensus awards risk avoidance: better to have more certain returns on modest investments than blowout returns on a bigger gambles. If that’s the case, we could be facing anemic growth for a generation.