By Jamie Barrie
F our years ago in the early stages of the U.S. economic recovery many predicted a shortage of jobs available but few people would have predicted there would soon be shortage of available workers. However, that is just the case as the ADP Research Institute is predicting the biggest problem the U.S. economy will face in the near future is not jobs, but a shortage of workers to fill available positions. Mark Zandi, the chief economist of Moody’s Analytics said in a report that “businesses are having a more dif- ficult time filling open job positions, which are near record highs.” According to Bloomberg the Moody institute’s monthly report on private payrolls showed that July outpaced forecasts by creating 179,000 jobs. That is 9000 more jobs than predicted, so that is a good thing right? Massive job growth is a welcomed sign by those looking for work. It does come with a price. When economies create jobs very quickly they reach a point called full employment and job growth slows. Economists continue
to debate where and when full employment is achieved but it is considered that if the unemployment rate is between the 4 to 6.5 percent level, that theoretically everyone willing to work is working. Some economists note that with unemployment as low as 4.8 percent it is natural to see business slowdown the growth in their workforce. That belief is magnified by weaker capital investment and poorer earnings growth than expected. As we move closer to full employment the greater the impact on small and medium sized businesses as the labor market continues to tighten and become more competi- tive to attracted skilled and unskilled applicants, they face challenges of competing with higher wage offerings from larger businesses with much deeper pockets to accom- modate these economic swings. Manufacturing is the sector where it is believed that the majority of growth is happening however, the construc- tion industry is an area which continues to disappoint with continued job losses in this sector of the economy.
47
DECEMBER 2016 • SPOTLIGHT ON BUSINESS
Made with FlippingBook HTML5