Despite Profits, Employers Not Yet Looking to Hire
Times are tough for the unemployed, and are looking to get worse before getting better, as employers as a whole are not hiring new employees. According to a recent Wall Street Journal article, even though the government is expected to report growth in the economy for the last week of October 2009 in the third quarter–the first after four quarters of contractions–many employers are in the midst of an unspoken hiring freeze. This news is to the chagrin of many unemployed workers desperately looking for jobs.
So why aren’t employers hiring? According to economist Mark Gertler of New York University, companies are reluctant to hire because the economic outlook to them still looks too uncertain. Here are a few other reasons that employers are holding back:
- False-hope avoidance: Many employers have seen profits; however, believe that they are due to government stimulus spending rather than actual strength in their respective markets.
- Potential costs of regulatory moves: They’re uncertain of what costs will be associated with health care and climate legislation and would rather hold still until they find out.
- Survival tactics have worked: Many employers have learned how to produce more with a smaller number of workers. So even though the average workweek is down to 33 hours (the lowest since the 1960s), productivity (output per hour of work) grew at a 6.6 percent annual rate in the second quarter. Also, why would they pay for new hires when they can also just give their current employees more hours?
While many employers have frozen hiring, there are some that are doing the opposite. Some companies like Cree Inc. in Durham, North Carolina recently expanded and added 275 jobs. However, most others aren’t doing the same, so it’s up to workers to find those diamonds in the rough. In the meantime, it’s good to take advantage of unemployment benefits and, most importantly, keep those spirits up as we all wait out for the economic upturn.
Are you in the midst of an active job search? How long have you been without work?
The information presented in this article was accurate at the time of publication but may have changed since. Visit Unemployment Rises to 9.6% for more up-to-date unemployment information and news.
