Unemployment rates still stand at over 9 percent, housing foreclosure rates are at a seven-month high and growing, and a trillion-dollar deficit reduction law is about to take effect, essentially guaranteeing to put more people out of work.
So why are employers now advertising for more jobs than at any time in the past three years? Is it possible they see a silver lining?
The corporate hiring process is traditionally straightforward. As business demand increased, so did hiring. The Great Recession of 2008 changed that. It did more than negatively impact company balance sheets; it tore at the very psyche of management, itself nurtured on decades of strong financial growth and the illusion of a managed economy. When markets plunged and lending dried up, companies slashed costs to the bone and sent pink slips flying, as if their only protection against the falling economy was to shrink even faster than the economy itself. Unsure what to do next, businesses froze up with fear from all the overriding uncertainty.
Now three years later, unemployment rates have barely budged, lending is still tight, housing inventory too high, and uncertainty still rules the day. What business needs most now is stability, something they can base their business decisions on. The same is true about possible changes in regulations, tax laws, energy policy and availability of lending. Uncertainty has taken a high toll on business as management has opted to play it safe and wait on the sidelines for calmer seas. With business insecurity so high, companies have been slow to make long-term strategic gambles, the crucial catalysts to growth and job creation.
While employers are still extremely cautious and business confidence still low, there finally may be early signs of change. While we can thank a strong and resilient stock market and low interest rates, those alone are not enough. Real change has to take place for uncertainty to decline. We have to address real issues that are causing business growth to stagnate once and for all.
Recently we have seen some early but positive signs of movement in this direction. We see this in our government taking the first steps in reducing our national deficit and beginning the process of getting our fiscal house in order, in our financial institutions doing the unfortunate but necessary foreclosures and write-downs to clean up their balance sheets so they can lend again, and in the European countries recapitalizing their banks to reduce the severity of their debt crisis that has a positive impact on our level of exports. Hard but necessary steps finally are starting to take place. Corporations are taking note.
In Georgia, the economic signs are still mixed. Unemployment rates are above the average for the nation. The percentage of Atlanta’s underwater homes is twice as large as it is nationally. Georgia, however, also has some positive things going for it, too. It leads the nation in new business startups, a key generator of new jobs. Some new homes are beginning to break ground, albeit in small pockets of Atlanta. For a town built on construction, this is a critical factor. Employment trends are still murky here, but there are early signs of hope.
There is still more to do, but companies are sticking their toes once again into the employment waters. If all continues to go well, maybe they’ll even go for a swim.
Charles F. Goetz is a senior lecturer at Emory University’s Goizueta Business School.
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