Today we saw the release of two piece of important employment data: the Challenger, Gray & Christmas monthly survey of lay-offsand the Monster Employment Indexwhich measures on-line want ads. The latter is an improvement over traditional want ads which were showing declines due to loss of market share to the web rather than actual job opening declines. Just because companies were not recruiting by printing their ads on dead trees doesn't mean they were not hiring. But even in the world of friction-free job recruiting, they are indeed not hiring. The index showed only on up month out of the last eight, and even now with the economic picture improving, job recruiting is still dropping. Why?
It's not as though these jobs are being decimated by lay-offs. Yes, there was a lay off peak last Fall and another bigger one in January, but since then lay-offs have dropped every month so far. In January there were roughly a quarter million jobs eliminated according to this survey. Last month there were less than seventy five thousand. You have to go back to Spring of 2008 to find levels that low.
So we're not firing many people, but we're not hiring either. Why? This is especially confusing given the political mood in Washington during the past two years which has been far more focused on job creation (or savings) than on general economic growth. The stimuli plans were supposed to be job plans. The auto/bank bailouts cum nationalizations were supposed to be about saving jobs, not 'Wall Street'. So given two record breaking stimuli within two years, why isn't America hiring?
America isn't hiring precisely because of government policy. Small business owners, who are usually the first into and the first out of the job pool, are standing by the fence and watching. They are paralyzed by regulatory uncertainty. If they hire someone who ends up doing poorly, will they be able to fire that person? Will they have to pay their health care bills after they've been terminated? If so, for how long? Who will pay for all these stimulus checks? If it will turn out to be small business, why would they hire instead of keeping costs low to prepare for the big tax bill? Where will the market move? Are you in the right business or are your clients in a politically disfavored industry? Are your clients in health care (being nationalized), autos (already nationalized), banking (somewhat nationalized) or any energy production process which uses carbon (pulverized)? Until you know, you don't grow, and until you grow your market, you don't grow your payroll.
Jobs aren't languishing despite the government's best efforts. They're languishing because of them.
Jerry Bowyer is chief economist at Benchmark Financial Network, is a member of the Kudlow Caucus, and makes regular appearances on CNBC. He also writes extensively on finance and history for the National Review, The Pittsburgh Post Gazette, Crosswalk.com, and The New York Sun. He can be emailed at firstname.lastname@example.org.