Employers Cautious But Not In Retreat On Labor Day 2011

In good times and bad, and especially when there’s a bit of both in the economy, just as there is now, the engagement of temporary and contract workers in the marketplace can be a telling indicator about the direction the economy is headed.

When companies fear the future, they cut back wherever they can and temporary workers are among the first investments to go. When the outlook improves, part time and temporary positions are the first to come back. That’s been the case throughout the economic travails of the past few years, and it can help us clear the horizon this Labor Day.

The words “double dip” turn up in most conversations about the economy right now. In many sectors, and by many measures, indices are trending toward a slow down.

When it comes to employment, though, the cold mathematics don’t necessarily predict what hiring managers are feeling and actually doing in the real, more hot-blooded world. Hiring managers have a job to do and need resources to do it. For anyone running a business graphs and statistics matter, but only up to a point. Companies don’t hire based on GDP, inflation expectations, the national debt or any other single statistical trigger. Hiring happens when companies exceed what they can get done with the teams they have in place.

With that in mind, there’s reason – at least right now – not to forecast another recession. Businesses are not letting temporary workers go in large numbers, as they have in the past when a downturn was on the horizon.

At the moment, companies are in more of a holding pattern. They are cautious, engaging resources where current capacity is exhausted, but they are not in retreat.

Uncertainty is about the only thing most of us are certain about this Labor Day. The often cited $2 trillion or more dollars currently held in cash "on the sidelines," by corporations seems unlikely to be put to work until there’s more clarity on whether taxes will increase, what incremental health care costs will be incurred, and what new regulation, if any, may yet be imposed, or withdrawn.

All of this creates uneasiness, especially in the shadow of the disappointing growth of the past few months.

In Q1, scenarios were not exactly rosy, but it seemed, however briefly, at least reasonable to discuss the possibility of generating 200,000 - 300,000 new jobs a month. That could have lowered unemployment to 8 percent by Election Day 2012. Now even that uninspiring number seems unlikely any time soon.

What positive employment signs there are converge on workers with the right skills, as any close observer of the employment landscape can tell you.

In IT, health care, finance and engineering, companies are looking and hiring workers, though, unfortunately, they’re not always finding the qualified talent they desire. There’s a significant talent mismatch, in fact, between supply and demand.  In these professional skills localized unemployment is less than 4% -- a far cry from the national average of 9.1%. Knowing how to do what companies need done right now is by far the best way to find a job in this economy.

This Labor Day, most of us also remain in “wait and see” mode.

President Obama will lay out his jobs plan on Thursday and Republicans will respond with plans of their own.

We can all agree that a more determined and specific effort to put people back to work is essential. Things can be done. Included in the president’s plan, for example, there will reportedly be a tax credit for employers who hire the unemployed. While well-intentioned, companies do not, and will not, hire someone based on their employment status, but instead, based on their skills, experience, motivation and fit for the role at hand. Extending the tax credit for simply hiring – employed or unemployed Americans – would better help encourage real hiring and yield the win-win scenario we continue to grasp at.

Other measures can help, too. The current Payroll Tax “holiday” matters. It should continue. If it goes away in January, that will mean a 2 percent loss of disposable income for millions of Americans. With consumer spending representing roughly two-thirds of our GDP, that’s not a good idea right now.

In this difficult recovery, most of the job growth we’ve seen has been in large companies – the 2 percent of businesses that generate half of employment. The other 98 percent of companies, those with less than 1,000 workers, continue to await steadier ground beneath their feet before they commit to new hiring. They are getting by with the resources they have. These companies in particular, so critical to national recovery, can benefit from public policy that energetically creates new incentives for investment in new products and services innovation that will help put people back to work.

For now, many companies will continue to meet their critical resource needs by hiring on a temporary, contract or part-time basis. Businesses require flexibility now, though many of those jobs will become full-time. In fact, we continue to see more and more that those who land temporary work often turn a “foot in the door” into an arm and a leg – a permanent full-time job.

This Labor Day, Americans remain among the world’s most dynamic, creative and productive workers. They’ve proven that again and again.

Now, millions just need a chance to prove it once again. With some focus from Washington on policies that really matter for job creation here in the U.S., let’s hope that by next Labor Day, many more Americans will have gotten that foot, or perhaps two feet, in the door.

Tig Gilliam, is CEO, Adecco Group North America.