Good Time to Hire?

The Bureau of Labor Statistics reports that 9.7% of the workforce is currently out of work. Not reported in that value is the large number of individuals who have given up looking for work and have returned to school, taken early retirements, or assumed a new life as a stay-at-home mom/dad. The Bureau considers these to be "discouraged workers" and if they are added to the mix of the unemployed the actual rate of unemployment is closer to 11% nationwide.

The availability of so much idle labor begs the question: Is it time to hire?

The question is a difficult one to answer as so much of the economic future is murky. While Vice President Biden sounded wildly optimistic about the impacts of the President's multi-billion dollar economic stimulus, taking credit for several million new hires the feeling on the street isn't universally upbeat.

A September 1st, 2009 report by the Bureau reports that unemployment varies wildly across the nation. "In July, 139 metropolitan areas reported jobless rates of at least 10.0 percent, up from 14 areas a year earlier, while 65 areas posted rates below 7.0 percent, down from 286 areas in July 2008. El
Centro, Calif., recorded the highest unemployment rate, 30.2 percent, followed by Yuma, Ariz., 26.2 percent...

Among the 19 areas with jobless rates of at least 15.0 percent, 8 were located in California and 5 were in Michigan. Bismarck, N.D., registered the lowest jobless rate in July, 3.1 percent, followed by Fargo, N.D.-Minn., and Rapid City, S.D., 4.2 percent each. Overall, 149 areas posted unemployment rates above the U.S. figure of 9.7 percent, 219 areas reported rates below it, and 4 areas had the same rate."

Most recently, the Conference Board reported that consumer confidence rose to a figure of 54.1 in August 2009 up from 47.4 in July. The Shiller Index reported a 3% increase in real estate prices in August. Both are very positive signs.

My personal opinion is that the Great Recession will continue on for some time. The concentration of unemployment in Michigan and California will be a drag upon the economy and not easily remedied. The housing depression makes transfers and relocations by employees to low-unemployment areas difficult, if not impossible.

Bottom Line: The results of the stimulus plan are mixed at best and a new class of hard-core unemployed in Michigan and California may endure for years to come.