Unemployment

I have just a short observation tonight. I read an article today predicting that companies have ringed as much as they could out of productivity enhancements and should soon be forced into more hiring. I only wish that were true. I left a comment to the article with two main points.

First, I contend that there is a fairly significant level of shadow inventory out there. Official unemployment numbers do not count those that have given up, but this does not mean they will not try again if there is any sign of decent jobs becoming available. If you read the numbers properly you will see that several percent of the employable population has simply given up. They are down, but not necessarily out.

Second, and more importantly, the employed workers have during the last few years had their hours cut rather significantly. This means, despite all the firing, employers have done what they can to keep a staff around should things rebound. And if they rebound, they have a lot of room to take in significant new levels of work without adding to ranks. After all, why hire new workers and pay benefits to new people if you current work force is underemployed. Just getting over folks working short hours will take a good bit of time, even assuming the article I read is correct that companies have already done what they can on productivity enhancements, which is a suspect proposition given the rate of tech innovation these days.

Disclosures: None.