Monday, January 3, 2011

Will We Ever Return to Full Employment?

From Bloomberg:

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.