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Home Publications Blogs Beat the Press Businesses Are Not Hiring Because of a Lack of Demand, Not Confidence

Businesses Are Not Hiring Because of a Lack of Demand, Not Confidence

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Thursday, 22 July 2010 08:42
USA Today wrongly told readers that: "private employers are uncertain about the economy's health and are hesitant to add jobs." The uncertainty of businesses does not explain their reluctance to add workers. If this were the case, then businesses would be increasing the number of hours worked per worker. While average weekly hours are up somewhat from the low hit last fall, they are still down by 0.7 hours from their pre-recession level. This indicates that firms are not hiring because they have no need of additional labor.
Comments (12)Add Comment
Demand due to no job?
written by JL, July 22, 2010 10:31
People are not buying or creating demand bc they have no jobs; they have no jobs bc businesses are not hiring.
Right idea, wrong article.
written by AndrewDover, July 22, 2010 11:55
Nope, USA Today correctly told readers that: "private employers are uncertain about the economy's health and are hesitant to add jobs." because demand is the crucial variable in the economy's health.

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written by fuller schmidt, July 22, 2010 12:21
So what's the uncertainty about demand? They already should know there isn't any increase coming until housing wealth is resolved.
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written by Queen of Sheba, July 22, 2010 4:23
So Andrew, which article were you referring to? Dean's quote was accurate for the article he referenced, including the period at the end of the sentence.

The most disturbing part of this piece to me was the reporting of these irrational numbers:

"As [home] sales have slowed, the supply of unsold homes on the market has risen 2.5% to nearly 4 million. That's a nearly nine-month supply at the current sales pace, the highest level since August....

The drop in June [home] sales was led by a more than 9% decline from a month earlier in the West. Sales were down 7.5% in the Midwest and down 6.5% in the South. But they rose nearly 8% in the Northeast."

and then, after all that bad news about sales:

"The median sale price was $183,700, up 1% from a year earlier."

How is this possible? Home sales have slowed (and are expected to slow further as the homebuyer credit has ended), the supply of homes in the market is rising - and still the sale price is up 1% over last year? How is this possible? What - or who - is keeping house prices up, and rising, while supply is gutting the market?
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written by Queen of Sheba, July 22, 2010 4:33
Excuse me - last sentence of my post should read "glutting" the market, not "gutting" the market.
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written by AndrewDover, July 22, 2010 9:11
Same article. Dean's point is that demand drives hours and employment. I agree. But the article is quite correct to use the phrase "uncertain about the economy's health" because that also means "uncertain about demand". I disagree with Dean's characterisation of the article.

I would guess median prices rose in June becaue less low priced home sold. First time buyers had a subsidy, so they bought earlier this year. So median prices rose a bit.

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written by skeptonomist, July 23, 2010 12:33
Other bloggers have been referring to this study:

http://www.nfib.com/Portals/0/PDF/sbet/sbet201007.pdf

Which has actual poll data on what small business owners are worried about. Surprise! - it's sales.

I can't remember what would have made them so concerned with insurance in 2002-8, but it's gone now.
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written by peggy dobbins, July 26, 2010 8:01
You must find a way to support guaranteeing a minimum number of hours at a livable wage.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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