Everybody is wondering where the jobs are?
Every time you see a story about why more hiring isn’t going on, the reporters always seem to be talking to this or that manager of a major investment firm. The lead figures of these investment firms always begin talking about companies levels of uncertainty, with Washington, with debt crisis in Europe, instability in the markets. See this.
But why aren’t they talking to the guy who owns the hardware shop down the road, or the steam cleaning service, or the dog grooming/boarding company or the widget manufacturer or any of the thousands of small business across the country that employ the vast majority of Americans. It isn’t because they can’t get loans; loan requests by business are down. And who needs a loan when American businesses are sitting on bucket loads of cash?
It is very simple why business aren’t hiring. They don’t have customers. Nobody is buying. Whether it is products or services being sold, made in China or America, there is not the level of desire by used-to-be customers to buy again. Fiscal spending would have little to nothing to do with companies wanting to expand. Why should they grow their business when no one is walking through the door. I have only found one economist who sees the real difficulty for businesses. “What’s limiting employment now is lack of demand for the things workers produce,” Professor Krugman wrote. “Their incentives to seek work are, for now, irrelevant.”
The plummet of ’08 showed us, if anything, that being a nation that does nothing but consumes is not a sustainable model of economic growth. The growth of personal debt through credit cards and, before the crash, home equity refinancing is what fueled much of the buying during the first part of the 21st century. Now that the bubble has popped, the only thing people have to show for their spending sprees is a mountain of paper. These people, whether they have learned their lessons or not, and even the ones who didn’t jump on the bandwagon, are not out there spending. These people are holding back, either paying off what they can or saving because they don’t see the future as any too rosy a picture. Add to this the number of un- and under-employed (around 20% all told) people and what you have is a great segment of the population that are not out purchasing goods and services.
Simply said, if sales are flat, companies are not going to be putting on more workers.
In the next post, I’ll look at the workers that do have jobs.