Increasing Employment – What Do Firms Need to Make it Happen?

We hear a lot in the media about corporate America sitting on trillions of dollars of cash while the economy is still hurting and unemployment is high. I don’t think many will find an argument there and wonder what it takes to open the pocketbook and bring on new workers.

I saw some answers to that question in a news item from the Business Insider and their Money Game Chart of the Day. You might want to subscribe to their news feed. They were reporting on the results of the Philadelphia Federal Reserve Bank manufacturing survey and questions that asked why they were either hiring or not.

This interesting chart shows that some 30 percent of firms are most influenced in their hiring decisions by growth in sales. Not surprising is it? You expect growth in sales and you’re more inclined to increase employment. Note that less than 10 percent indicate that an overworked current staff is the most important reason! Of course the other side of the coin is, what factors restrain hiring and no surprise again that “expected growth in sales is low” is the most important factor for 30 percent of firms. Sort of suspect it may be the same guys focused on sales!

Politicians like to talk about uncertainty of regulations, taxes, and costs and the standstill of the bureaucracy as the big obstacle but clearly, when you get the scoop directly from businesses, it’s the business that matters – keep costs low and only hire when sales are high.

There’s another response here that shouldn’t be glossed over. Twenty percent of firms indicate that not finding workers with the required skills is an important restraint on hiring. That’s a lesson for education and those trying to cure the unemployment situation. Workers need to have the skills that employers are looking for and the mismatch between those two may be bigger than we think.

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