As the presidential campaign continues, much attention has been focused on jobs and the loss of jobs and how one candidate or the other would create more jobs and on and on. Much of the rhetoric is based in distortions of the underlying trends in the economy. While this argument has become more difficult to support in recent months, the so-called “jobless recovery” garnered more of its fair share of headlines.
As the current recovery cycle began, there was room in the economy for expansion without the creation of additional jobs through improving productivity and efficiencies and more effectively utilizing the existing workforce. Employers were more reluctant to hire than is typical in expansions due to the combined effects of the September 11 attacks, the corporate accounting scandals, and the onset of war. However, this slack has now been absorbed.
Although there was an unusually long lag between the time most indicators of US economic health turned the corner and when hiring began in earnest, the number of jobs has grown in each month of the past year. In fact, March and April of 2004 saw net gains exceeding 300,000 per month. The pace slowed somewhat through the summer, but showed signs of renewed life in August (adding 144,000 jobs) and September.
Evidence of the improving job market was felt on college campuses across the country. Information recently released by the National Association of Colleges and Employers (NACE) indicates employers anticipate hiring 13% more new college grads in 2004-05 than a year prior.
In addition, starting salaries are trending upward. In many disciplines, increases of 3-5% were observed. While initial offers for some degrees (such as engineering) were largely unchanged, few declined. Computer science grads are enjoying a significant boost of more than 4%, and average offers to information sciences graduates were up almost 11% (some of this expansion is making up for lost time—offers were actually smaller last year than in prior years).
Business administration graduates’ initial salaries were up more than 6% on average, and selected other majors are seeing notable gains. English majors, for example, saw offers up more than 8%. Demand for new hires is boosting salaries across a spectrum of occupations, a clear sign of recovery in the job market.
All in all, the US economy is now creating jobs at a healthy pace. Uncertainties remain, such as high energy prices, ongoing military action, and the upcoming elections. As these issues are resolved or stabilize, the pace of hiring will escalate. Occupations expected to see the largest gains in employment include those in healthcare, education, technology-oriented fields, and other services-related areas.
Globalization will continue to contribute to job growth. Although politically charged debates center on the thousands of formerly American jobs now being performed overseas, recent studies have shown that the practice of “offshoring” actually creates more jobs in the US than it costs. Through the enhanced efficiency afforded by offshoring, companies have fared better and expanded (or remained viable) domestically. In addition, the number of jobs with foreign companies held in the US by Americans more than offsets those that have been outsourced. This trend is expected to continue, with some dislocations of workers, but no true threat to overall job creation.
As the economy continues to gain momentum, job growth will also improve. For newly minted college grads, experienced professionals out of work, and all of the job seekers, the tide has clearly turned. This economic recovery is no longer jobless (and hasn’t been for quite some time), which is good news indeed.