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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2011 > February > 14 > Entry
Editorial: When do profits translate into more new jobs?
A few passages from Ohio news publications this month:
• “The best month for U.S. factories in nearly seven years is brightening the outlook for job growth.”
• “The U.S. economy looks to be gaining steam as the number of employers announcing job cuts hit a record low in January. Ohio had the second-lowest number of job cuts in the Midwest.”
• “Ohio retailers capped off an already stellar 2010 with the busiest January since before the recession.”
Nationally, corporate profits reached their highest level ever in the third quarter of last year, the last quarter for which the numbers are in. The fourth quarter was good, too.
Current stock market numbers reflect how good business is. And business being good used to be the definition of a good economy.
So what about jobs?
The national numbers for the last month showed a striking contradiction. The unemployment rate dropped by 0.4 percent in just one month (for the second month in a row), which is an extraordinary drop.
But the number of jobs added to the economy was officially only 36,000. It’s about a fourth of the number needed just to keep up with growth in the labor force.
The explanation for the contradiction may simply be that both numbers are wrong. Job-growth numbers are frequently changed — more than once — as more data comes in; sometimes the changes are quite serious.
The official unemployment rate doesn’t get changed, but the perspective offered after the passage of time can suggest that the numbers for a particular month were misleading.
Many corporations are being cautious about investing their new profits. President Barack Obama has urged them to “get in the game,” to start hiring. That urging is not likely the solution.
Ultimately, as consumers start spending more money (credit card balances are starting to rise again), businesses are likely to want their share of it and are likely to spend to get it — but perhaps more cautiously than after past recessions.
Economists report that productivity increased during the recession. As companies see themselves thriving after job cuts, they are destined to think really hard about what jobs to add.
Some say that the corporate world has been scared by the Obama administration, that business leaders don’t know what it’s going to do next. But the stock market numbers don’t reflect any such worries.
States are competing with each other more intensely than ever to offer conducive business environments. Pro-business forces have greater strength in Washington.
The president himself is trying to get beyond the Wall Street-bashing days that followed the collapse of the financial sector.
Business people don’t want to repeat recent history. Many business voices have criticized some sectors for lack of caution in the years before the collapse.
So the jobs recovery will apparently take time.
People who need a new livelihood will have to think as hard as the executives about what new directions to take. A day when businesses in general are hiring may happen, but the best bet is that certain sectors will have most of the action for a while, at least.
For most of those hardest hit, the past is not likely to return.
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