Many mainstream experts were confused by Friday's jobs data, blamed the disappointing increase in nonfarm payrolls on the weather, or dismissed the report as being inconsistent with the recovery they see unfolding.
But even if we view the January employment data in its most optimistic light, there's plenty of other evidence that suggests current employment conditions and prospects for the year ahead are unencouraging, to say the least, including:
1. Surveys that consistently show unemployment is worse than official statistics indicate
Gallup's U.S. employment measures report the percentage of U.S. adults in the workforce, ages 18 and older, who are underemployed and unemployed, without seasonal adjustment. "Underemployed" respondents are employed part time, but want to work full time, or they are unemployed. "Unemployed" respondents are those within the underemployed group who are not employed, even for one hour a week, but are available and looking for work. Results for each 30-day rolling average are based on telephone interviews with approximately 30,000 adults. Because results are not seasonally adjusted, they are not directly comparable to numbers reported by the U.S. Bureau of Labor Statistics, which are based on workers 16 and older. Margin of error is ± 0.7 percentage points.
2. Surveys that show small businesses remain reluctant to hire
PRINCETON, NJ -- Half of small-business owners (51%) who employ people other than themselves hired new workers in 2010, according to the Wells Fargo/Gallup Small Business Index survey. However, of these, 42% hired fewer new employees than they needed -- likely a major reason job growth was so anemic last year. Of course, an additional factor is that 48% of small businesses with more than one employee did not make any new hires in 2010.
The Wells Fargo/Gallup Small Business Index survey further reveals that the top reason so many of these small-business owners are hiring fewer employees than they need is that they are worried they won't have sales or revenues to justify more employees. This is followed by worries about their future cash flows and whether they will have money to make payroll. Third is their concern that they can't find employees who are qualified for the positions available. Finally, half of owners say they are worried about the potential cost of healthcare.
3. Reports that indicate large businesses are reluctant to hire
"No Rush to Hire Even as Profits Soar" (Wall Street Journal)
The lack of significant job gains 18 months after the recession was declared over isn't such a mystery when considering how companies were able to return to strong profit growth in a relatively short period. They mainly relied on aggressive job cuts, and with companies now pleased with their revitalized earnings and demand still choppy, they seem to be in no hurry to add to their payrolls.
There are exceptions. Strong exports of energy and grains have farm suppliers and railroads hiring new employees. Retailers including Wal-Mart Stores Inc. that curbed expansion plans or shuttered concept stores during the downturn are taking advantage of lower rents to open new outlets, adding to their work force.
But more broadly, companies' outlooks for 2011 have revealed a fresh reason to hold off on hiring: A wide range of industries—as diverse as airlines, appliance makers, auto companies and food sellers—are dealing with sharply higher costs from spiking commodity prices. That is pressuring profit margins and keeping companies guarded about adding to labor costs.
4. Reports that point to major layoffs by state and local governments in the period ahead
"Jobless Rate -- Government Layoffs Could Reverse Trend" (Watertown Daily Times)
State and local governments and school districts have been insulated from massive layoffs during the recession by the injection of federal stimulus funds. But the economy, and with it tax revenues, have not bounced back as expected, so now local governments must confront the choices put off by federal aid.
Stimulus funds for municipal governments will drop from $59 billion this year to $6 billion in the fiscal year starting July 1. Last month, local governments reduced payrolls by 12,000 workers, and more layoffs are looming.
Gov. Andrew M. Cuomo has proposed firing 9,800 state workers. In Texas, nearly 8,100 jobs could be eliminated; in Iowa, 1,500. One economist predicts government job cuts could reach 30,000 a month by the end of the year.
That could ripple through the economy with less spending leading to slower job growth and even more layoffs into next year and the start of a presidential campaign.