The BizFilings blog covering business tips and trends.
An Overview of the U.S. Employment Situation
Published on Apr 28, 2011
Read our article, 'An Overview of the U.S. Employment Situation' at 'Time to Start Up,' the small business blog by BizFilings.
Economists could debate for eons over what fundamentally drives the U.S. economy. There's the credit market, the finance sector, employment and consumer activity, to name just a few motivations, but most analysts maintain that the real push is an elaborate confluence of all these forces.
However, it seems a stretch to posit that an economy could function healthily with a dismal job market. Employment puts money in the hands of populations and, hence, consumers, and in the U.S., consumer activity is the largest portion of the economy.
Accordingly, economists urgently await jobs reports such as those from the Labor Department and Automatic Data Processing, the latter of which reported hiring among small businesses to be progressing at a pace double that of 2010's averages.
"So far this year, companies with fewer than 500 employees have added an average of 188,000 jobs a month, according to payroll-company Automatic Data Processing Inc," writes Sarah Needleman in the Wall Street Journal. "Last year, they added an average of just 68,500 jobs a month."
Meanwhile, the Labor Department has reported steady declines in the national unemployment rate since November, reaching a two-year low of 8.8 percent in March.
However, skepticism remains, and few analysts have been able to view these improvements as clear indications of an overall trend.
Last fall, Federal Reserve Chairman Ben Bernanke told the news program 60 Minutes that "it may take four or five years" for unemployment to reach pre-recession levels.
The Wall Street Journal and ADP have pointed out that the majority of small business hiring in recent months has come from the finance, tech and services industries, but whatever market is creating the most jobs, it is activity in the small and mid-sized business sector that is most crucial.
Small businesses employ nearly half of all private sector employees, and that figure increases substantially when mid-sized firms are included. For this reason, organizations ranging from massive banking conglomerates to federal agencies have been pushing to stimulate entrepreneurial and small business activity.
Last fall's Small Business Jobs and Credit Act, for example, called for the creation of a $30 billion lending fund for community banks with the intention of stimulating the credit market for small companies.
While the matter of the credit market is a whole other area of debate, most analysts agree that financing difficulties - be it due to a lack of credit or poor sales - is the major reason why owners are not hiring en masse.