Wednesday, March 03, 2010

Now Hiring?

Story in yesterday's WSJ on how Companies Are Mapping Their Routes to Recovery shows again that while the bleeding of jobs has largely stopped, most firms don't plan on bringing them back any time soon:

Corporate America is emerging from the worst downturn since the Great Depression smaller and thriftier.

To survive, companies have laid off millions of workers, closed hundreds of factories and vacated acres of office space. Like those who grew up in the Depression and still reuse sheets of aluminum foil, the experience has left them financially conservative and wary of risk.

The road to recovery will likely be marked by slow and steady acceleration, rather than speed. Some companies will see opportunities to amass undervalued assets or steal customers. But it is unclear if their efforts will create enough new jobs to spark broader economic growth.

Many companies will likely wait until growth forces them to start hiring again. And it will require some time and a fair degree of pain before they reach that point.

Having cut jobs and capacity, streamlined production, distribution and logistics, many companies like their slimmer look. "We have put the genie back in the bottle, and I'm not ready to let it out," says Parker Hannifin's Mr. Washkewicz.

Indeed, while some employers have added modestly to their payrolls, the absence of broader hiring remains a problem for the nation's economy, which depends on consumer spending.

More than 60% of the 1,000 chief executives surveyed by YPO Global, a network of 17,000 executives, expect their work forces to be the same a year from now. About 30% see an increase and 7% a decrease.

If only 30% of companies plan to expand their work forces in the next year, it means we won't see a significant bounce back in jobs that would signal a robust economic recovery. One thing that isn't mentioned in the story is the impact that uncertainty about what's coming next in terms of health care reform, regulations, and taxes is having on companies willingness to add employees. But this is also undoubtedly a drag on how quickly jobs come back as well. And the "job creation" steps the government has taken--whether in the form of stimulus spending or onetime tax credits--seem unlikely to change companies plans in this respect either.

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