Employment worries are dragging the economy

Americans are still worried about the employment situation, and although studies show an improving job market, the progress is being made at a painfully slow pace. Exacerbating the problem are worries among older members of the workforce about their ability to retire. And on the other end, college students just entering the job market are more interested in security than other employment attributes.

Robust employment is the economic driver that floats all boats, and the lack of it is equally deleterious. Citizens with steady and comfortable income are consumers – they spend money and create demand, which in turn creates a reason for businesses to keep on hiring to meet the demand and profit from it.

The unemployed, on the other hand, can only spend on the most pressing subsistence items; they draw money out of the economy, consuming government services at a greater rate, all on top of the need to provide them with unemployment insurance benefits.

At least we may have found the bottom
A study from Consumer Reports finds that loss of employment that has characterized the financial meltdown seems to have subsided. But the level of job creation needed for a recovery is not in evidence, and in fact, the situation worsened, if only slightly, comparing March results to those of February.

The Consumer Report Employment Index for March stands at 48.7, representing job loss compared to February’s CREI of 49.0. 6% of consumers reported a job loss within the prior 30 days, compared to 5.7% in February, and CR sees this as a sign of stabilization.

However, there was a bigger drop in those reporting a new job start. 3.5% said they took a new position in February, down from 6.2% in September – indicating that there is difficulty getting the unemployed back into the workforce.

There was improvement in CR’s Trouble Tracker, however, which pinpoints areas of financial difficulty. The March figure of 52.4 is an improvement over February’s 53.4 and a big improvement over September’s 68.7. Medical bills and jacked up credit card rates were identified as areas of concern.

“Though we are seeing modest gains in consumer confidence, led by the Trouble Tracker, pointing to a decline in financial difficulties, without improvement to the employment picture consumers will be reluctant to engage in the recovery,” said CR’s Ed Farrell. “Once we begin to see job creations, a return to a solid, sustainable retail growth will emerge, and the consumer recovery will be more attainable.”

Looking at the employment situation from the employer’s perspective, Manpower Inc. saw much the same thing. Those who are currently employed seem to be relatively safe, but most employers anticipate only modest, if any, employment increases. Manpower puts the current hiring outlook at +5%, compared to -2% this time last year. 73% expect to have a stable employment situation within their own company.

"U.S. hiring activity is still in neutral, but revving toward first gear," said Jonas Prising, Manpower president of the Americas. "It's moving in the right direction, but it will take some time, with no major speed bumps, before it can accelerate."

Manpower broke the hiring prospects into 13 categories, with the following results: Leisure & Hospitality (+17%), Professional & Business Services (+15%), Mining (+11%), Nondurable Goods Manufacturing (+9%), Financial Activities (+9%), Durable Goods Manufacturing (+8%), Information (+8%), Transportation & Utilities (+8%), Wholesale & Retail Trade (+7%), Construction (+4%), Other Services (+4%) and Education & Health Services (+3%), and Government (-1%).

Retirement – later; security – now
Employee Benefit Research Institute and Mathew Greenwald and Associates collaborated on the 2010 Retirement Confidence Survey (RCS), and what they found was a trend toward procrastination based on economic uncertainty.

They note that the economy is starting to improve and that retirement confidence is beginning to stabilize, but that on an individual basis there is still a great deal of concern.

Part of this is caused by the fact that the very financial institutions which most rely on for retirement plans are the very same institutions that catapulted the financial crisis in the first place. There is very little confidence in financial institutions, not much in the government, and somewhat more in private employers.

The upshot is that many are planning to delay retirement, which puts pressure on the entire employment market – a job not vacated is a job that does not need to be filled, and an opportunity lost for a member of the unemployed.

“Americans' attitudes toward retirement have clearly tracked the economy the last couple of years, and that seems to be the case in 2010,” said EWBRI’s Jack VanDerhei. “Unfortunately, while their attitudes are stabilizing, their preparation for retirement is not. A distressing number of people have no savings at all.”

Meanwhile, a study from KPMG of college students found that over 75% will place job security at the top of their list of employment attributes, a tribute to the continuing instability of the global economy. Many say they will put off the job search in favor of pursuing an advanced degree, and many more are looking to enter government or non-profit sectors rather than take a chance on a standard business.

RBR-TVBR observation: We are glad to see solid signs of the bottom – it does seem like at the very least matters are not getting worse. But watch those employment stats.

Remember that month of no new jobs may look at the very least like a neutral month, but in fact, it is not. Every month hundreds of thousands of young citizens enter the job market for the first time. The economy is not healthy unless it is generating a place for all of them, and then some.

And then some is particularly important right now because there are still hundreds upon hundreds of thousands who were dropped out of the employment pool and are still trying to get back in.
Until there is robust employment growth, and we’re talking three or four hundred thousand jobs monthly, overall economic improvement is likely to remain on a snail’s pace.

A final note: Isn’t it sad that the young among us have been robbed of optimism? Instead of following their dreams, they’re thinking about not getting laid off. That is antithetical to the can-do American spirit, and we hope this noxious employment environment is put behind us absolutely as soon as possible.

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