The U.S. job market has improved since the unemployment rate's 10.1% high in 2009, but the sluggish pace of economic recovery has kept many workers jobless and discouraged.
The U.S. Department of Labor reported earlier this month that the country's unemployment rate in April rose to 9.0% from 8.8%. Employment in more than a dozen sectors hit four-year lows in April, and another 10 have gained little since hitting lows in the beginning of this year.
But it's not just a slow economic recovery that is leaving people unemployed. The U.S. job market is changing, as companies find ways to function with fewer workers and some shift operations overseas.
More than 13 million people are searching for work, and even though U.S. companies have collected about $940 billion since the credit crisis, many aren't hiring.
Most prefer to spend in other ways, creating a wide gap between capital spending and employment. Corporate investment will climb 11% this year while employment only rises 1.7%, according to a Bank of America Merrill Lynch report.
The report states inventory rebuilding, low borrowing costs, and tax breaks for equipment buying are encouraging companies to spend, not hire.
And some that are adding workers have turned to temporary staffing for flexibility in employment.
"This is the new face of labor," Neil Alexander, from the labor law firm Littler Mendelson, told MarketWatch. "We have large clients that have laid off hundreds, thousands of employees. They are now using a large chunk of temp workers, managing their labor needs in real time. It's cost containment."
Another factor to high unemployment is that the U.S. job market is changing its structure and needs. Even as U.S. manufacturing has started to pick up in recent months, jobs in that sector have not followed suit because companies are using newer technology that allows them to get done the same amount of work or more without hiring as many people.
Manufacturers of nondurable goods lost about 600,000 jobs during the recession and have only brought back about 20,000 of those positions since January of this year.
"Those jobs are not likely to come back," Mark Vitner, senior economist with Wells Fargo Securities, told CNNMoney. "Those plants are so automated, you have to increase output an awful lot to create very many jobs."
Many companies are also hunting for new employees overseas, shifting their workforce away from the United States to be more globally balanced.
Software maker Oracle Corp. (Nasdaq: ORCL) and Cisco Systems Inc. (Nasdaq: CSCO) both added about twice as many workers overseas over the past five years as they have in the United States. General Electric Co. (NYSE: GE) now has about 54% of its workforce abroad.
A big reason for the shift is growing demand for products and services in emerging markets.
"It's time to own up to the fact that the United States is no longer the world's growth engine," said Money Morning Contributing Editor Shah Gilani. "Developing countries and economies have now assumed that mantle. There's still demand for U.S. goods and services overseas, but it's a lot more efficient to manufacture in those markets where you are selling products."
Now some analysts wonder if the United States has lost its appeal as a place for multinationals to invest in employment.
"It's definitely something to worry about," economist Matthew Slaughter told The Wall Street Journal.
This brings us to next week's Money Morning "Question of the Week": Are you worried about the future of the U.S. job market? Is increased efficiency and a shift to hiring abroad going to leave many without work, or will industries rebound in the United States? Are you worried about your employment future? What can be done to improve the U.S. job market?
We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- Money Morning:
U.S. Companies Spending Record-High Cash Piles On Everything But Jobs - Money Morning:
How to Use Capital Flows to Turn the Economy's Job Losses Into Portfolio Gains - MarketWatch:
U.S. employers shift to temp workers - The Wall Street Journal:
Big U.S. Firms Shift Hiring Abroad - Money Morning News Archive:
Question of the Week Feature
Economists fail to realize the extent to which advancing technology and globalization are contributing to unemployment. While we all wait for the economy and job market to recover, businesses are going to continue to automate and offshore jobs as they continue to cut costs.
For a great overview of this, see this book:
"The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future"
http://www.amazon.com/gp/product/1448659817
A free PDF is also available here: http://www.thelightsinthetunnel.com
Also see the author's blog at http://econfuture.wordpress.com.
I think the issues raised in this book are among the most important that we will have to confront as a society. I encourage everyone to read it…
I have a web site where I give advise on penny stocks and stocks under five dollars. I have many years of experience with these type of stocks. If their is anyone that is interested in these type of stocks you can check ouy my web site by just clicking my name. I would like to comment . I do not think that we will see real improvement in the economy until we see sustainable job growth. Recently the number of jobs created has been running around two hundred thousand a month.The GDP report that just came out recently was only 2% this is not nearly high enough to sustain employment growth of two hundred thousand jobs a month Another factor holding things back is stagnation of wages and benifits. This is good for business owners but terrible news for workers.