As the U.S. economy gains momentum heading into 2011, small-business employment is lagging behind other drivers of the recovery. While past rebounds were led by companies with fewer than 500 people adding full-time workers, some owners say they’ll rely on part-time help and push their staffs to be more productive as they wait as much as a year for demand to improve. This has helped keep unemployment near a quarter-century high, even as household purchases have risen for five straight months.
“I’m not sure we’ll ever return to the type of full employment we’ve had in the past,” said Charles McMillion, president and chief economist at forecasting firm MBG Information Services in Washington, who has studied labor markets for 30 years. Employment conditions like those of 1999, when the jobless rate was as low as 4 percent, won’t occur “for a very long time, if ever,” he said.
Investors are “rewarding” the efficiencies small businesses adopted to battle the recession because the changes have gone “hand and hand with better profitability,” said Michael Shaoul, chief executive officer of New York-based Oscar Gruss & Son Inc., which provides research to institutional investors.
Thursday Watch
1 hour ago
3 comments:
It will be a while before we get to a solid full employment. The number will come down but there are a lot of people underemployed.
Economics is about allocating resources. When prices are controlled the allocation is "f"ed up. When the Fed pushed short-term rates to 1% in 2003 and kept them there for a year before sharply raising them they in effect shifted resources into home building/mortgage brokering etc. Then pushing the short-term rate sharply higher said we didn't those workers.
There are a lot of people hurt by these games including those getting ready to enter the job market.
These kinds of dislocations take years if not decades to fix. You can't easily take a carpenter and tell him or her we need them to teach school.
A lot of economists would say 6% is the new low in unemployment. 4% can be achieved in time but it would take many years of sustained fundamentals.
Bonddad, where we live in Tucson, AZ, we have always had a higher than average unemployment rate but we also have always had a rather large (uncounted) resourceful informal mini-economy with entrepreneurs who earn their money locally doing everything from making yard statues to washing windows to selling prickly pear jam to cactus removal to playing music at Farmers markets to providing massage, etc, whatever they think they can offer that has value to others, without being a "small business." They will never be wealthy, but neither are they ever broke.
Is this the same everywhere?
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