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  • Upstart CEO: Jobless Recovery — Boon For Business?

    The people out of work: can’t find work – because they’re already out of work.

    Upstart: Gamechangers

    It’s strange how the long-term unemployed have been marginalized and ignored – especially with a liberal president: an African American president, who should have more empathy with middle and lower displaced workers, yet somewhat in his defense, he and progressive politicians had to fight for extended benefits for those without work, as opposed to conservative politicians, who wanted to dramatically scale back benefits from the normal rate.

    We also learned that many job recruiters are openly proselytizing that they will not hire anyone out of work for an extended period – even as local, state and federal authorities have become aware of this debilitating trend. So the long-term jobless: the people out of work, the people in most need of work – any kind of work: can’t find work – because they’re already out of work.

    Yet, I want to look at the “jobless recovery” through a different framework: look at it through the new benefits a jobless recovery presents for businesses. I know this might sound misguided, but the new normal of high unemployment and worker’s increased multitasking is a boom to many businesses, and it’s important to know why the unemployment figures might be here to stay.

    The first thing that the jobless recovery did for businesses was reduce headcount: it eliminated the major costs within any business — employees. Buy decreasing salaries, operation costs and benefits, many businesses lost good people, but received more profit – they will always be willing to make that tradeoff. Remember, business owners and stockholders are interested in creating wealth, not creating businesses – understand the distinction – it’s a sobering one, but one that will help you understand why the recovery is not happening — the businesses that have adjusted well to the non-recovery recovery might not want the recovery to happen.

    You might ask, “How do they do business without employees,” well, software and increased workload for current employees is the answer. People are doing two jobs for the same money, and new technology is “permanently” eliminating many customer-oriented and manufacturing positions – those jobs are never coming back – it just costs less to do it the new way – and whether you like it or not, that is a central tenet of capitalism – to raise profits by cutting all discretionary costs.

    The people who remain behind within these companies have very little leverage, so rarely can they complain about their increased workload, because what’s the alternative? You might protest yourself out of a job – and that’s the reality of the new employment landscape. So the reason people don’t complain is not because they think it’s fair, but because they are frightened to death to be called into human resources at 3:00 pm on Monday – into a room of dour-faced executives, because they’ve seen friends and long-time workers make this march — never to return. It is the professional death walk: so we don’t have people innovating – we have them surviving—living on the edge – taking on too much, while still being expected to create better companies, families and communities. American businesses are trying to create a better America, as a result of cutting its way to growth. Not going to happen – they know this, and they’ll milk it for as long as they can.

    And what is not talked about, is that by wages being flat or depressed, and with the high unemployment numbers – there is a frenetic battle for mid to lower-end jobs. Many white collar workers were downsized, those jobs eliminated and not coming back – they are taking mid-tier positions and lower, so there is a glut among service workers, immigrants, those with only or less than a high school diploma, which makes for tense and adversarial theatre, so the bargaining chip is not about skill-sets, experiences or potential, but who will do the most for the least – and not only not complain, but be grateful for the chance to be exploited in such a way.

    The other major issues for businesses is that they can have their cake and eat it too. They play both sides of the political spectrum. They say if taxes are not lowered, it will prevent them from hiring, yet with years of tax cuts – especially designed for corporate and wealthy constituencies, hiring is still abysmal.

    Also, businesses want more stimulus – so they can create infrastructure and export on the government’s dime, which is a terrible irony, because the tax money they are using to improve and expand their businesses, are still coming out of the unemployment checks of the people they are “not” hiring.

    Federal, state and local government should recognize this is the new normal – the “hustle economy, “ which might spawn more entrepreneurs, yet might create a vicious spike in homelessness, social service subsidies and credit card debt.

    I believe federal, state and local governments should develop incentives for hiring, but it has to be tangible, trackable and measurable – results oriented. The government continues to create programs and platforms for the business community to ignite hiring, but they have found that a jobless recovery can be good for business, and I don’t think they know they way forward, nor have the courage to produce something dramatic — something antithetical to the business community with the political season looming.

    Good Luck.

    Calvin Wilson
    Founder and CEO

    Upstart: Business and Management for 20-40 Year Old Professionals

    Filed Under: Gamechangers


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