Wednesday, September 8, 2010

Why Aren't Firms Hiring?

Consider the following two graphs:

Capacity utilization is just now returning to the lowest level of the previous recession. In other words, there is a ton of excess capacity that needs to come on line before firms start hiring en masse.

Hours worked are still incredibly low and have plenty of upside room as well.

Simply put, there is still a ton of excess capacity in the system.