The Problem with the Job Market

Brittney Barrett |

The market was pushed up slightly this week on news that number of new unemployment claims has fallen. This has been something carefully observed by the media and achievement the government often pats themselves on the back about. Layoffs; however, are only part of the problem and the other part is ignored too often. Granted fewer people are leaving offices with a carboard box full of their things these days but there’s no one walking in the door either. The job market problems are not over merely because layoffs are at a record low since so many of those people that were victims of layoffs through the recession still don’t have jobs.

One Associated Press article discusses a Massachusetts employment organization that called for its annual job fair when not enough corporations offered to participate. The chairman for the even had been hoping at least 20 to 25 companies would sign up for a table at the fair as they usually do, but instead, only 10 came forward.

This is not a phenomenon limited to the Taunton, Massachusetts area either. The lack of hiring is an epidemic everywhere and it isn’t because companies aren’t making money and can’t afford to hire new employees.  The fact is, that despite economic improvements and a report today from the Bureau of Economic Analysis indicating corporate profits rose a staggering 29.2 percent for 2010, companies are still reluctant about hiring. The sharp rise in profits marks the most rapid growth rate in 60 years, but the attitude and climate negates these facts.

Today in trading is a perfect example of this sentiment. Stocks were up, even through significant global turmoil both for the day and for the week but many investors claimed not to know where the market was going and maintained that there were no clear indicators about its direction.

The threat of an economic double dip has contributed to many companies holding off on new hires and a general lack of faith in the strength of the recovery. Oil prices at their highest levels since 2008 and still rising, mean consumer spending and the annual GDP could be seriously affected. The rising energy costs will mean greater overhead for businesses and while this is only one factor among many shaking companies, the persistent chatter about it represents a certain anxiety among American companies and investors.

Like a person coming out of a bad relationship, it seems difficult for America to trust again.  Many companies have learned to function with fewer people and rather than take a risk hiring a new person only to have to fire them again at the next major bump in the road, American companies are sitting tight.

Unfortunately, the lack of new hired represents a self-fulfilling prophecy and the more people that remain out of work, the more plodding and tenuous the recovery will be.

 

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Symbol Name Price Change % Volume
DGSE DGSE Companies Inc. 0.85 0.02 1.92 978

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