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Wednesday, December 8, 2010

Companies are using productivity gains to decrease new hiring

Photo Credit-Calculated Risk
A chart of part-time U.S.
employment for economic
reasons
A number of U.S. companies are using the productivity gains –having workers do more with fewer resources- as a way to keep from hiring new employees. 


Even with holiday temporary workers and  a strong start to the initial holiday shopping season, retailer are operating with less help than in the past.

"There's no question that employers are being cautious about hiring, especially full-time workers," said Sung Won Sohn, economics professor at Cal State University Channel Islands told CNN. "They're not certain the recovery is for real so they're taking their time. And because of productivity gain they don't need to hire as many people."

With part-time employees, retailers can avoid paying for any type of benefits programs and have decreased payrolls, to hold costs down. According to a December 3rd BLS report, the number of workers only able to find part time jobs (or have had their hours cut for economic reasons) declined slightly to 8.972 million in November but, has been around 9 million since August 2009, a very high level.

Other forms of part-time or less hiring is up among companies.  A recent report by the Freelancers Union cited that 30 percent of the U.S. job market -about 42 million workers- are made up of independent contractors, part-time or temporary staffers and the self-employed. It is less likely that Freelancing type of work would include any benefit programs.

Full-type employment opportunities for job seekers do not appear to be better on the business corporation front, factories or other industries.

"It's not just getting people to do more," said Tig Gilliam, president of North American unit of placement firm Adecco to CNN. "I think companies have stopped doing things. They've said 'It was a nice to have those extra 23 reports we used to do every week, but we don't have the people to do them.' That's not going to change."

While the unemployment rate has been stagnant above 9.0 percent over the last year and one half the gross domestic product, the broadest measure of the economy, has recovered 84 percent, according to CNN, of the output that was lost during the recession. In contrast the labor market has recouped only 11 percent of the jobs that were lost.

Until workers start to ‘push back’ about increasing demands of companies with less pay or performing enough work for two employees themselves, it is unlikely that the business community attitude in this area will change.

"There is a limit. Workers do start to push back," Lakshman Achuthan, managing director of Economic Cycle Research Institute said to CNN. "But business managers don't hire because they're nice guys or girls, they hire because they're scared that they'll lose business to someone else. That'll be what gets hiring done."


What are your thoughts on this article? Do your believe that businesses 'doing more with less' will continue to impact our current 9.8 percent unemployment rate? Feel free to comment on this story, below!
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