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Help Wanted – Not So Much

Written by admin | Aug, 21, 2013

help-wanted-index-072111

Not surprisingly unemployment claims rose this week to 418,000 initial claims for the week which also takes us to 19 weeks in a row above the 400k level. Ladies and gentleman, this is not healthy for the economy by any stretch of the imagination. Normally, if we are above 300,000 initial claims we are talking about a recession.

However, for a different take at why unemployment remains stubbornly high the chart shows the “help wanted” index going back to 1951.   The original index, which was print ads, was discontinued in June 2010.   The new index, online jobs, was started in May 2005.   To blend these two indexes together I adjusted the new online index to the May 2005 level of the original index setting the index at 38.

The index shows that while online job ads have risen a tad from the recessionary lows we are still at levels that are far below normal ranges and are still at normal recessionary levels which coincides with the jobless claims, unemployment numbers and weak economic growth.   Businesses aren’t hiring because of the lack of final demand, consumers can’t spend because they don’t have a job and food and energy are consuming more than 20% of their wages and salaries which in turn keeps businesses from hiring other than mostly temporary help to fill short term requirements.   This is the virtual cycle that the economy is currently trapped in.

Therefore, back to unemployment claims, with job openings scarce, the economy weak and companies focusing more on cost cutting and conservation strategies, it is no wonder that employment remains elusive.   The more that the current administration continues to pump uncertainty through the economy and promote ideas that reduce long term economic growth – the longer and more pervasive the problem will become.

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