Will job growth be hindered by the election?

By Joseph Coombs Oct 5, 2012
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Politicians, pundits and job market experts alike frequently cite "uncertainty" as a root cause for weak hiring.

Yes, employers are uncertain about the U.S. economy. And they're also skittish about future tax policy, government spending, oil prices, the Middle East, China's reduced rate of growth and just about any other aspect of domestic and global affairs that can impact their business.

And a pending presidential election only adds to the anxiety. In the coming weeks, you'll probably hear a lot of employers say they're "waiting to see what happens after the election" before they solidify any hiring (firing?) plans.

I don't think you should buy it, and here's why. While it's valid for any business owner to have concerns with the political environment, trends in tax policy or government spending, their real problems are still connected to demand, or lack thereof, for their products.

Consider the headline on this report from Gallup in February. It blames health costs and government regulations for curbing hiring among small businesses. Now check out the chart that explains why those companies aren't hiring. The number one reason? More than three in four (76 percent) employers said they "don't need any additional employees at this time."

Another 71 percent said they were "worried revenues or sales won't justify adding employees."

Elsewhere, in the summary for the National Federation of Independent Business (NFIB) "Small Business Economic Trends" report for September 2012, NFIB highlights the fact that 22 percent of businesses view the current period as a "bad time to expand" due to "political uncertainty." That's a record high for the business cycle, according to NFIB.

A closer review of NFIB's data, though, shows that a much higher number (38 percent) of respondents said it wasn't a good time to expand because of "economic conditions."

Now, despite all this uncertainty, there have been a few shreds of good news lately, and maybe they'll give employers cause to expand their payrolls. The Conference Board's Consumer Confidence Index rose in September to its highest level since February. More consumers said they expected business conditions to improve over the next six months, and they also had a more favorable outlook for the labor market, according to The Conference Board's report.

All major components of household spending rose in 2011, according to the U.S. Bureau of Labor Statistics. Average annual expenditures per consumer unit – which includes families, single persons living alone and people living together who share expenses – rose 3.3 percent in 2011, compared with a 2 percent decline in 2010.

Some of this increased confidence and spending power may translate into job opportunities in the near future, political uncertainty aside. Staffing services company Manpower reported that the fourth quarter employment outlook is the strongest in five years for that October-December time period, according to one of its recent surveys.

But we're also reminded by one of Manpower's top executives that employers have had plenty of other things to worry about while managing their payrolls.

"Despite the tumultuous global economy, election uncertainty, record heat waves, healthcare reform and other challenges, employers indicate that steady but cautious hiring progress will continue through the end of the year," said Jonas Prising, ManpowerGroup president of the Americas.

Well, we certainly hope so.

Joseph Coombs is SHRM's senior analyst for workforce trends.

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