The Breakdown: Economy

Big hurdles to job creation remain

Mitchell Hartman Aug 19, 2011
The Breakdown: Economy

Big hurdles to job creation remain

Mitchell Hartman Aug 19, 2011

MITCHELL HARTMAN: Imagine a new reality show — it’s called Hey, America, Get a Job, and it has this edgy-yet-upbeat music. And here’s our first contestant.

BRITTANY REICHARD: My name is Brittany Reichard. I’m 22, I live in Oregon and I’ve got a job.

Brittany is one of the winners! And now she talks about the long odds she faced, and how consistent persistence helped her land an entry-level marketing job in her field — environmental science.

REICHARD: The adults in the job industry are staying in their jobs longer. Young people coming out of college don’t have a place to really fit in. And so it’s just kind of keeping your arms open and trying to reach whatever you can out in the job market.

Her employer, meanwhile, could be a winner on reality TV, too. The company, called Columbia Green, has been growing by leaps and bounds. It’s a roofing manufacturer that installs plants and soil on top of commercial buildings to filter storm-water. The green roofs can save building owners a lot of money on waste water disposal and energy. Vanessa Keitges bought the business two years ago.

VANESSA KEITGES: Our products went national, and most recently international with Canada, Europe and New Zealand.

Keitges expects revenues to hit $3 million this year, and $15 million by 2013. She’ll double the office staff to 12 next year.

But this reality show celebrating job creation — well, it may not have a very long run. Because as much as we cheer for the few companies that are growing, it’s not enough — not nearly enough.

WILLIAM DUNKELBERG: Actually, I don’t think we’ve seen any decent jobs growth since the recovery allegedly started back in June of ’09.

William Dunkelberg is chief economist at the National Federation of Independent Business.

DUNKELBERG: Just to keep up with population growth, you need about 125,000 net new jobs every month. Then if you want to re-employ the eight million people that we fired during the recession, we need well over 300,000 jobs.

That’s every month, for at least the next three years. Recently, we’ve been adding just 70,000 jobs a month. While health care, hospitality and manufacturing have been hiring, everything connected to housing — from construction to real estate — has been stuck in the mud.

Still, with corporate profits up and companies sitting on piles of cash, why aren’t they using some of that to hire up? Dunkelberg says it’s a simple matter of not enough demand in the economy for goods and services, especially from consumers.

DUNKELBERG: The problem with the weak consumer spending that we have is that the likelihood of a new employee being able to generate enough additional value to the company — sales, or whatever — is pretty low, so there’s no good reason to hire.

And so many reasons not to hire. I caught up with David Allison at the factory he owns in suburban Chicago. Jet Finishers has about 50 employees and does industrial coating for tractors, military vehicles and consumer electronics. Allison laid off a third of his workers in 2009. Since then, business is up, and the factory’s humming, but —

DAVID ALLISON: The people we have hired when we’ve needed extra hands, we’ve brought them from a staffing agency, because we’re just loathe to bring anyone on permanently.

What would make you think twice about what you just said?

ALLISON: You know, that’s tough, I’ve been thinking about this myself. It really comes down to how I feel about the future. We did hire a couple of people, we did make that decision, and I ended up letting one of them go again. What would have to happen is, we’d have to see some sense that the growth is permanent, not just a temporary blip.

There’s no shortage of ideas for pushing business owners like Allison off the fence and into hiring mode. Many in the business community support a payroll tax cut for employers, for instance. That would shave a bit off the cost of adding workers to your payroll.

ALLISON: I don’t think a few percentage points one way or the other on a payroll tax is going to make any difference.

An employer tax cut would also add to U.S. government debt. Cheaper ideas include boosting exports — which are already a bright spot for the U.S. economy. President Obama says ratification of free-trade agreements would create jobs in the manufacturing and service sectors.

Another proposal: give immigrant entrepreneurs a “start up visa” to settle here if they create jobs. Many Democrats are calling for another round of spending on roads, bridges, schools. That would mean paychecks for laid-off construction workers, and, most likely, a bigger deficit.

Stimulus dollars have kept the 400 union workers at Oregon Iron Works, outside Portland, busy right through the recession, cranking out massive bridge fittings, boats and streetcars. As that funding runs out, company vice president Chandra Brown worries about a drop-off in business. At all costs, she wants to avoid layoffs.

CHANDRA BROWN: So I tell you what, even in the downtown, we are going to keep our best people. That’s our number one responsibility is to keep our currently fantastically trained welders and fitters, machine shop — that you can’t even find anymore.

It’s unlikely any of the ideas now being floated would generate the 300,000 jobs we need every month to dig out of the unemployment hole. And with the economy actually slowing down, the best hope may simply be that companies don’t start downsizing yet again.

I’m Mitchell Hartman for Marketplace.

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