The labor market has been weak all year, with a slow drip of workers losing their jobs each month. But the deterioration of the job market is now emerging as a driver of economic distress, according to a wide range of data and anecdotal reports from corporate America. Full Story »
Posted by Kaizar Campwala
Irwin and Rosenwald give a good, hard look at the employment prospects across a broad cross-section of economic sectors: All look bleak, and all substantiate other related pieces about worker underemployment, consumer confidence falling, retail sales slumping, and an entire economy with a bad case of heebeejeebees.
In the greater Los Angeles area, Manpower, one of the nation’s largest temp agencies, has noticed a steady increase in job seekers since early September. Paul Holley, a spokesman for the company, said there are more applicants for fewer openings and better-qualified candidates seeking work. What’s particularly noteworthy, Holley said, is what’s happening in Phoenix. Job applications have held steady, but since September more applicants have had backgrounds in general labor and warehouse distribution. That’s unusual because warehouse and logistics jobs usually hold steady in the fall to support retailing for holiday shopping. Randstad USA, another large temp agency, reports that job applications are up in the Tucson area and that the firm is even getting inquires from people who still have jobs. “In general, a lot of people seem to be insecure about their current jobs even if they are still employed,” said Emily Cline, Randstad’s area vice president for Tucson.
For the congenitally affluent and for most skilled younger workers—Gen X and Gen Y and their succesors—this is the first time they’ve experienced anything besides a big, booming economy with seemingly infinite prospects. But for older folk, and those who lack the advantages of a good education and the accompanying opportunities, or never connected with their dream job, this is familiar territory. Perhaps one bright spot in this falling dark is this: Those who have long scorned “the lower classes” for their lack of motivation, lack of effort, and blame them for barely getting by, perhaps the formerly-affluent will gain a bit more compassion, understanding, and respect for the diligence and innovation and effort it takes to carve survival out of nothing.
Indeed, many companies are imposing hiring freezes. Such moves don’t often get the kind of headlines that layoffs do, but because they shrink the number of places people can turn to for jobs, they still hurt the economy. VMware, a Palo Alto, Calif., software company, is one firm that has curbed hiring. Earlier this week, after reporting third-quarter earnings that beat Wall Street’s expectations, VMware told analysts on a conference call that despite a 32 percent jump in revenue, a “hiring pause” had been imposed for all jobs except critical ones. “We are just being conservative,” VMware spokeswoman Mary Ann Gallo said yesterday.
To calm the panic during The (first) Great Depression, President Franklin Roosevelt told America: “We have nothing to fear but Fear itself.” How well does this apply to today’s ‘downturn’? What if everyone just stood still, took a deep breath, untied the knot in collective psyche’s knickers, in addition to taking FDR’s advice, followed the motto of the late Douglas Adams’ “Hitchhikers’ Guide to the Galaxy:” “Don’t Panic!”?
Investment advisors tell us to be calm as the markets play roller-coaster with our net worth, but calm is hard to come by when daily/weekly/monthly income is slashed. We're trapped in a vicious cycle with bleak prospects for turning things around: Reduced spending cuts jobs; Job cuts reduce income; reduced income cuts consumer spending; Reduced consumer spending cuts jobs, and down we go. One possible step to rethinking this cycleis to adjust our view of the market. Why does a company's share value go up when they slash their workforce? Let me get this straight: Company ABC lays off 80% of their employees, and their stock is suddenly worth MORE??? How can that be? When we have a system that only rewards profitability, whose profits are we talking about? Without workers, there is no product. Without a product, what is the company selling? Moreover, what are investors buying? Are we condemned to an out-of-synch string of bell curves...costs are high, so labor goes down; profits go up, but sales go down; labor is rehired to replenish inventory, profits and investments go down; labor is slashed, profits go up, and so on. Some say that insanity can be defined as repeatedly performing the same actions and expecting a different outcome. Might we apply this theory to our current economic model?