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Home Publications Blogs Beat the Press Fiscal Cliff Concerns Did Not Restrain Hiring

Fiscal Cliff Concerns Did Not Restrain Hiring

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Saturday, 02 February 2013 06:29

The NYT is still pushing the line that, "uncertainty over fiscal policy and the fragility of the economy still seem to be holding back employers." There is no evidence in this or prior job reports to support this contention. If employers are seeing a level of demand that would otherwise justify hiring, but are reluctant to do so because of uncertainty, they would look to fill this demand through alternative channels.

The two obvious alternatives are increasing the length of the average workweek and hiring temporary employees. The average workweek has been stable or even gotten slightly shorter in recent months. Temp hiring has been extremely weak. These facts suggest that the reason for lack of hiring is simply that employers are not seeing adequate demand, not uncertainty. 

The piece also told readers:

"Economists are forecasting job growth of around 170,000 a month for the rest of 2013, comparable to job growth over the last year."

That would probably be the view of economists who could not see an $8 trillion housing bubble. Economists with a better understanding of the economy would probably project a slower rate of job growth. The economy had been growing at just a 1.5 percent annual rate in the second half of 2012. There will be downward pressure on growth from the ending of the tax cuts and the sequester or other budget cuts. In this context it is more likely that growth will be around 120,000 a month, a pace closer to the underlying rate of growth of the labor force.

Comments (2)Add Comment
...
written by fuller schmidt, February 02, 2013 8:26
Instead of the Pledge of Allegiance, Americans should start the day by reciting the Average Workweek and Temp Hiring numbers.
putting lipstick on a pig
written by watermelonpunch, February 02, 2013 12:06
I don't know how this fits into the big picture exactly...

There's a make-up factory in my area, which seemed to start paring back on hiring temp workers during autumn (they've been big the past year at least on hiring temp workers), but then bought out 2 other companies, and started expanding in December.
http://thetimes-tribune.com/news/scott-twp-cosmetic-maker-plans-to-boost-hiring-1.1437903

Clearly they were not concerned about the fiscal cliff per se, putting money into buying other companies & expansion in the later part of last year.

Obviously if this company is looking to hire people, it's because their demand is up, for whatever reason.
I'd say most likely due to other such companies going down the toilet - otherwise how many reasons could there be for them selling their name & assets to this company?
This company may indeed be expanding their workforce. But the fact that they bought out 2 other factories... one has to assume that there were (perhaps equal, or more) lay-offs in the New York City suburbs (both companies purchased were within 20 miles of Manhattan).

Isn't that a pretty good indication that our area's new jobs may be coming at the expense of lost higher paying jobs elsewhere? (Cost of living & average wages, even in the Poconos, and especially in Scranton, is far lower than the areas surrounding NYC.)

So, while I think one can look at this example, and see it as evidence that companies are not basing their decisions on political disputes going on in DC.
It's also not a great indicator of an improving economy.

(There's also of course an argument, I suppose, along the lines of the lipstick index. But I'm not sure that applies today the way people used to think it did 25 years ago, or during my grandmother's Great Depression youth.)

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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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