Are Businesses Holding Off Hiring Because of the Deficit?

[Faeelin]

Top Obama adviser says unemployment won't be key in 2012
By Ian Swanson    - 07/07/11 08:25 PM ET
President Obama's senior political adviser David Plouffe said Wednesday that people won't vote in 2012 based on the unemployment rate.

Plouffe should probably hope that's the case, since dismal job figures aren't expected to get any better for Obama and the economy on Friday.

Most economists expect a report from the Bureau of Labor Statistics to show that the nation added about 100,000 jobs in June. That's not enough to keep up with population growth, let alone lower the unemployment rate or make a dent in the 9 million jobs lost during the so called Great Recession.
It's looking more and more like Obama will have to do something no president has done since Franklin Roosevelt: Win reelection with unemployment around 8 percent.

Ronald Reagan, another president Obama is sometimes compared with, was reelected in 1984 when unemployment was 7.2 percent. Obama isn't likely to see a number that low.

Mark Zandi, chief economist for Moody's Analytics, predicts the nation will have added 110,000 jobs in total in June, with 125,000 added in the private sector. Hiring by the public sector will continue to fall.

The economy would have to add 350,000 jobs every month between now and December 2014 to get back to the pre-recession low of 5 percent unemployment, last seen in December 2007, according to the Economic Policy Institute (EPI).

Reagan saw that kind of growth after the recession of the early 1980s, and it helped him win reelection by a comfortable 18 points. He also faced Walter Mondale, a weak opponent, from the opposing party — a bit of history Obama hopes to repeat in 2012.

The economy hasn't seen such high-octane growth since August 1993 to February 1995, when it last averaged 350,000 jobs created per month. Even during the tech boom in the latter half of the 1990s, the economy didn't average that many jobs, according to Heidi Shierholz, an economist with EPI.

The Obama campaign's hope is that voters will feel the economy is improving in the fall of 2012, just as they did when Roosevelt and Reagan were reelected.

That seemed to be at the root of Plouffe's remarks on Wednesday, as quoted by Bloomberg.

"The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers," Plouffe said, according to Bloomberg. "People won't vote based on the unemployment rate, they're going to vote based on: 'How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?' "

The remarks will likely irritate Democrats who think Obama and his political team have taken their eye off jobs.

There's some reason to think Obama could get a boost from the economy in the second half of the year, particularly given signs that the White House and congressional Republicans are moving closer to a deal that would lift the nation's debt ceiling and cut trillions from annual deficits.

There's no doubt such a deal would boost confidence in the economy and the political system. It could also boost hiring.

Layoffs have basically stopped since the recession, said Shierholz, but employers aren't hiring even though corporations are expected to announce huge profits for the first half of the year.

"We are still treading water at the bottom of a deep hole," said Shierholz.

The only real improvement in the labor market since the recession ended is with workers who have decided to sit out the slow economy and not look for a new job. That's helped keep the unemployment rate low, Shierholz said.

Zandi argues the economy was sidetracked for the first half of the year by a number of shocks that he hopes are temporary.

They include the devastating tsunami in Japan that wreaked havoc on manufacturers around the world; turmoil in the Middle East; the ongoing conflict in Libya that sent crude oil prices to summer highs in the spring; and the debt talks, which Zandi said appear to have led the Treasury to slow outlays to avoid breaching the debt ceiling.

"The ill effects of these shocks are or will soon fade and even add to growth during the second half of the year," Zandi said in an email. He expects payroll employment gains to be back near 200,000 by the end of the year.

If Zandi's right and those gains continue through 2012, Plouffe might be proven right, too, as voters could be pleased with their position.

But there isn't a lot of room for Obama to maneuver when it comes to the unemployment rate.

http://thehill.com/homenews/campaign/170309-plouffe-says-jobs-rate-not-key-in-2012

I bolded the relevant part, which surprised me because I wasn't aware that companies were holding off hiring because of the debt ceiling. Is this happening, or is this really just grasping at straws as we prepare for President Romney?

[jimmy olsen]

http://thehill.com/homenews/campaign/170309-plouffe-says-jobs-rate-not-key-in-2012

I bolded the relevant part, which surprised me because I wasn't aware that companies were holding off hiring because of the debt ceiling. Is this happening, or is this really just grasping at straws as we prepare for President Romney?

I'm sure they don't care about the debt, but some may be worried about the economic fallout that could occur if no deal is made in time.

[Zanza]

I bolded the relevant part, which surprised me because I wasn't aware that companies were holding off hiring because of the debt ceiling. Is this happening, or is this really just grasping at straws as we prepare for President Romney?

Businessmen are just normal people too and they do care about the deficit and the debt just like everybody. If the average American thinks that his country has deep fiscal problems that will include most business owners too.

To add an anecdote: There was an interview with the CEO of the huge multinational enterprise I work for and he said that deficit reduction and fiscal consolidation should be the number one priority for politicians, more important than tax breaks.

[crazy canuck]

I bolded the relevant part, which surprised me because I wasn't aware that companies were holding off hiring because of the debt ceiling. Is this happening, or is this really just grasping at straws as we prepare for President Romney?

Businessmen are just normal people too and they do care about the deficit and the debt just like everybody. If the average American thinks that his country has deep fiscal problems that will include most business owners too.

To add an anecdote: There was an interview with the CEO of the huge multinational enterprise I work for and he said that deficit reduction and fiscal consolidation should be the number one priority for politicians, more important than tax breaks.

QFT

[HisMajestyBOB]

The next big thing: unpaid jobs!
http://management.fortune.cnn.com/2011/03/25/unpaid-jobs-the-new-normal/

Unpaid jobs: The new normal?

While businesses are generally wary of the risks of using unpaid labor, companies that have used free workers say it can pay off when done right.

By Katherine Reynolds Lewis, contributor

FORTUNE -- With nearly 14 million unemployed workers in America, many have gotten so desperate that they're willing to work for free. While some businesses are wary of the legal risks and supervision such an arrangement might require, companies that have used free workers say it can pay off when done right.

"People who work for free are far hungrier than anybody who has a salary, so they're going to outperform, they're going to try to please, they're going to be creative," says Kelly Fallis, chief executive of Remote Stylist, a Toronto and New York-based startup that provides Web-based interior design services. "From a cost savings perspective, to get something off the ground, it's huge. Especially if you're a small business."

In the last three years, Fallis has used about 50 unpaid interns for duties in marketing, editorial, advertising, sales, account management and public relations.  She's convinced it's the wave of the future in human resources. "Ten years from now, this is going to be the norm," she says.

Why do people work for free?

The benefit unpaid labor offers to a business is pretty clear, but it can also give employees needed experience, a reference letter or even a self-esteem boost in a depressing economy.

Cassie Johnson, a 27-year old in San Marcos, Calif., lost her job as an enrollment adviser for an online university in 2009 and was receiving unemployment benefits for a year before finding an assistant manager position at a Starbucks (SBUX) that's so far from her home she spends most of her pay on gas. Since starting a public relations internship in February, she feels a renewed sense of purpose.

"I'm learning a lot and I feel really good about it. I'm happy. I feel relevant. I'm not making any money, so it's tough, but I feel it's setting me up for a career," Johnson says. "I only have $1.50 left in my checking account right now but I'm living with my boyfriend and he's been really good about supporting me."

Sometimes, gratis work can even lead directly to a paid opportunity. Theresa Potter had been a marketing executive for 30 years when, during a career lull, she agreed to work on a few marketing initiatives for free at Coalescence, a Columbus, Ohio-based custom spice blending firm.

"You have amassed a lot of this information and you like to share it. You like to see companies become successful," Potter says.

Potter's year of volunteering at Coalescence paid off when the company's founders asked her to take the reins as president -- a salaried position. She felt comfortable taking the job because she'd become so familiar with the corporate culture and business goals.

But is it legal?

Unfortunately for many employers hoping to use unpaid labor to advance their business goals, there are strict federal and state rules that workers must be paid the minimum wage and paid for overtime, and must abide by other provisions in the Fair Labor Standards Act, which applies to about 135 million people working for 7.3 million employers. The FLSA doesn't apply to companies with less than $500,000 in annual revenue unless they engage in interstate commerce -- which can be as little as accepting credit cards or placing phone calls to another state.

"We don't have a system in this country where you can work for free," says Jay A. Zweig, a partner who works in employment law at Bryan Cave in Phoenix. "The exceptions are very, very rare, and generally there are state laws that would fill in to say that, unless you meet specific criteria, you're going to get in trouble with the government."

Unless someone is an intern, trainee or independent contractor, he or she has entered into an employment relationship when starting to work for a company. Federal and state authorities are alert for employers who may be taking advantage of the tight job market to skirt the rules.

The Labor Department has a strict six-point test to determine whether someone is an intern or trainee and separate guidelines for independent contractors. An internship must primarily benefit the intern, who must work under close supervision and not displace existing staff. Independent contractors cannot work under the control of the employer or be economically dependent on the firm.

"If a person has entered into an employment relationship with a company, they need to be paid for their work," a U.S. Labor Department spokesperson says. "We stepped up enforcement to ensure these businesses are complying with FLSA. We've hired an additional 250 investigators."

With the additional federal scrutiny, unpaid arrangements such as auditions or tryouts are even less likely to pass muster than in the past, says John Thompson, a partner at employment law firm Fisher & Phillips in Atlanta.

"A lot of employers don't get that the law is not about personal responsibility or agreements between consenting adults; it's about getting the pay to people as the law requires," Thompson says.

Companies that are found violating the law will likely have to provide back pay, monetary penalties up to $1,100 per violation and damages that equal the amount of wages, Thompson says.

The challenges of hiring and managing modern day serfs

Like others who have used unpaid labor, Remote Stylist's Kelly Fallis recommends beginning with a very specific job description and conducting a thorough hiring process to screen out people who aren't going to give their all for nothing.

Candidates who respond to Fallis' postings on Craigslist and Facebook must fill out a detailed email questionnaire and undergo two rounds of phone interviews and three in-person interviews.

Those who join Remote Stylist, whether they are students or out-of-work 20- or 30-somethings, must agree to a four-month run and sign a hiring contract. She asks interns to commit 30 hours a week; she has been burned in the past by people who were trying to juggle a paid job with their commitment to Remote Stylist.

Believe it or not, the competition for some unpaid gigs can grow intense. John Lovejoy, managing director of multimedia fundraising company Nomadic Nation, received 300 responses for an editor position and 700 cameraman applications after only one week of advertising a project to drive from Germany to Cambodia in plastic cars. Not only were the positions unpaid, but successful candidates had to pay their own expenses.

One editor and two cameramen ended up quitting before the end of the trek due to rough conditions and 16-hour workdays. In retrospect, Lovejoy says, "I would screen a little bit better and make sure they understood that this wasn't a vacation."

Crystal Green, owner of Tallahassee-based event planning firm Your Social Butterfly, has had mixed results with unpaid staffers who didn't take their responsibilities seriously. She's even had to retrace the missteps of unpaid staffers and apologize to alienated business partners.

"It's really hard as a single entrepreneur to babysit these people who need to learn. They're not making any money, so you have to be very patient," Green says.

None of these employers said they were concerned that they were violating the law -- whether or not they actually are -- but most get what they pay for, raising the question of whether they'd be better off just going with the time-honored tradition of paying employees.

"It's better to have one decently paid person than nine unpaid people who are making it so difficult because they're slacking off or they're difficult to manage," Green says.

Now I know why I've had such trouble finding a job - I've been demanding a paycheck!
Clearly the next step is pay companies for the honor of working for them.

[grumbler]

To add an anecdote: There was an interview with the CEO of the huge multinational enterprise I work for and he said that deficit reduction and fiscal consolidation should be the number one priority for politicians, more important than tax breaks.

Another anecdote:  the small businessmen I know of (including myself) think cash is better to have in hand during times of uncertainty than labor, even if that labor is creating opportunities for the future.  Everybody looks at what is happening to businesses in Minnesota, and knows that pretty much every business owner in that state wishes they had spent less on salaries over the last year and kept more in reserve to cover the expenses of business in a depressed economy.

Given the failure of national political leadership in the US, who can blame business people for being pessimistic?  Refusing necessary limited revenue increases harms the economy far more than those revenue increases would.

[Zanza]

The next big thing: unpaid jobs!
http://management.fortune.cnn.com/2011/03/25/unpaid-jobs-the-new-normal/

Now I know why I've had such trouble finding a job - I've been demanding a paycheck!
Clearly the next step is pay companies for the honor of working for them.

We have that shit in Europe too. Well-educated (though usually in liberal sciences) people that have to do internships and other short term, terribly paid jobs to get a foot in the door is becoming the norm here in many fields, especially so in stuff related to media, advertising and the like. The word they coined for this is "precariat" or "generation internship".

[viper37]

I bolded the relevant part, which surprised me because I wasn't aware that companies were holding off hiring because of the debt ceiling. Is this happening, or is this really just grasping at straws as we prepare for President Romney?

They may shift part of their businesses to another country where things are going better.  Big corporations tend to that, then their local suppliers require less people because there is less work, and so on.

[HisMajestyBOB]

To add an anecdote: There was an interview with the CEO of the huge multinational enterprise I work for and he said that deficit reduction and fiscal consolidation should be the number one priority for politicians, more important than tax breaks.

Another anecdote:  the small businessmen I know of (including myself) think cash is better to have in hand during times of uncertainty than labor, even if that labor is creating opportunities for the future.  Everybody looks at what is happening to businesses in Minnesota, and knows that pretty much every business owner in that state wishes they had spent less on salaries over the last year and kept more in reserve to cover the expenses of business in a depressed economy.

What happened in Minnesota?
Genuinely curious - I must have missed it.

[HisMajestyBOB]

The next big thing: unpaid jobs!
http://management.fortune.cnn.com/2011/03/25/unpaid-jobs-the-new-normal/

Now I know why I've had such trouble finding a job - I've been demanding a paycheck!
Clearly the next step is pay companies for the honor of working for them.

We have that shit in Europe too. Well-educated (though usually in liberal sciences) people that have to do internships and other short term, terribly paid jobs to get a foot in the door is becoming the norm here in many fields, especially so in stuff related to media, advertising and the like. The word they coined for this is "precariat" or "generation internship".

The differences between this and internships seem to be that internships are generally for a set period of time, then they'll usually offer a full-time paid position. Or they're only for currently enrolled students. These are basically the same as paid, full-time entry-level employees, only they're not paid. Why pay $30k+ for an entry-level employee when you can get a half-dozen unpaid employees.

[grumbler]

What happened in Minnesota?
Genuinely curious - I must have missed it.

Democratic governor + Republican legislature that wouldn't consider new revenue = government shutdown and lots of state workers no longer spending money.  Businesses that depended on government employees as customers are on the verge of financial collapse.