I stole this line from randy054, but I think it’s an important point in today’s economic situation.
A lot has been made of Obama’s anti-business posturing. I’m not sure if they actually believe it or not, but conservatives have been pushing the notion that small business aren’t hiring because of the way Obama makes them feel. If they aren’t confident in the future, if they think Obama is going to fuck them, they’re going to remain cautious and that means no new hires.
See this thread for evidence of what I’m talking about if you think this is all a big straw man.
A lot of this seems to be based on the idea that businesses (small and large) want to hire more people. But they don’t. Why would they?
In all my experience with small businesses (mostly in the restaurant industry) labour costs were that one sticky point employers struggle to shut down. They always have their fixed costs like rent. And they can always adjust their variable costs (food/supplies) to match demand. But the last thing you want is staff from the holiday rush standing around in January with nothing to do.
Even now in corporate America. Businesses were more than happy to have an excuse to shed stuff under the guise of a bad economy. In a lot of cases the work load didn’t change, it just got shifted to a smaller group. Now that the economy is picking up, businesses are making more money, with fewer people doing more work.
And that’s the point. Businesses want profit, not employees. The recent recession was just another typical January when businesses could shed excess labour and carry on making money.
A high unemployment rate is great for businesses. It depresses wages, it encourages loyalty, and it provides a constant excuse for why they need to make more layoffs.
In the end, anti-business posturing has nothing to do with it. Businesses were given an opportunity to get rid of staff which they happily took. Now they can make fewer people do more, which will make them more money. As a result, unemployment will continue to lag long after the economy picks up steam. Individual businesses will hold off hiring as long as they possibly can, regardless of what president is in office.
That has always been my view. My understanding is the labor force has been cut by 10% (which includes both layoffs and hour cuts) but production only went down 3%. And I guess demand is picking up overseas, so businesses are still making a nice profit by selling to foreign countries. And like you said, high unemployment gives all the power to employers. It depresses wages, allows employers to cut benefits, and gives employees no real alternatives or options if they feel they are being mistreated since nobody else is hiring.
However I have also read something like 50% of people are considering changing jobs when the economy recovers. So there are likely to be long term anti-business attitudes that come out of this recession.
Why do they need the bad economy as an excuse to lay people off? Why do they need any excuse at all? You said it yourself, businesses try to make a profit. Sometimes that necessitates hiring more employees, sometimes it means laying them off. You don’t need any nefarious ulterior motives to explain that. Sometimes a cigar is just a cigar.
You’re telling me the only reason there were more jobs before the recession is because businesses couldn’t think of a good enough excuse to lay off employees? And now that the economy is in the shitter, small businesses are jumping for joy at their newfound freedom to fire people?
I don’t think they’re jumping for joy, but it’s always harder for a business in boom times to provide incentives in a job they don’t have to stay in, where as a recession will scare them into staying into that job and accepting what craps thrown at them.
What I love is the bizarre claim that businesses aren’t hiring because of “uncertainty,” & this somehow means we should block all the majority party’s attempts at getting out of a fiscal hole & fixing things like Medicaid in the hope that somehow the minority party will come to power & then…not fix those things?
Businesses are always shy about firing people. Too many and it’s bad publicity or could lead to lawsuits.
Look we all know none of us is working all the time. We all could be more productive than we could be. But in good economic times there’s a difference.
Suppose in the mid 90s my employer wanted me to work harder. I’d tell him to stuff it and walk down the street and in 5 minutes I’d have another job. I had no reason to work harder because employees were in demand
OK 15 years later the situation is reversed. Employees are a dime a dozen.
For example in the mid 90s a hotel where I worked in Chicago was a large convention type hotel with over 700 rooms. We had 9 people in our accouting department. Now today there is only two people. Sure there’s not as much business but they just took all those accouting jobs and spread them around.
For example after a group left the accounts receivable and credit manager would make out bills. Now the sales person who booked the group does it. It’s just a job shift.
As you noted a lot of deadwood did get let go. But there comes a point where the trade off is going to hurt you. This is because people who are treated unfairly now (whether or not this is true doesn’t matter, it’s how they feel that counts), will go elsewhere when the economy gets better.
You people have some pretty weird ideas about how businesses work.
Yes businesses exist to make a profit. But you all seem to act as if they also exist to fuck over as many people as possible because they can.
Business create or shed jobs because they have a financial incentive to do so. The only jobs companies WANT to add are for people who generate revenue for the company. Salespeople. Business developers. People who bill hours to clients. Everyone else is just a cost center necessary to support the business.
Yes, companies will take a high unemployment rate into consideration when calculating wages. However, the most valueable empoyees - the ones who actually contribute to the growth of the business - are always in demand.
No, it means that companies are hesitant to hire because they don’t know how all the new regulations will affect their employee costs.
Your thesis lacks everything except opinion. Government policies (taxes, regulations etc…) affect the economy and the environment that businesses must work in. You’ve assigned emotion (happiness) to a process that is driven by math. Laying people off is expensive because half of the wages are paid with no return of labor. Profit and loss are not esoteric emotions but rather a clear indication of success or failure. Failure means the business cannot continue to exist over time.
Government polices can have a either positive or negative effect on businesses.
My state went from one of the lowest taxed states to one of the highest and the jobs shifted accordingly. On a federal level the current President and party in power have enacted health care policies, idled thousands in the oil drilling field, and are still pursuing an increase in cap-and-trade taxes. All this affects the cost of doing business. All this affects jobs.
If any emotion can be assigned, it is the stress inherent with the act of laying people off.
Their business decisions aren’t based on who they fuck over or who they benefit, but what the returns are on their investments and business strategies. And most notably today, is not on long term projections but quarterly profits for themselves and their shareholders. If it kills people, puts people out of work, or even helps others, its not part of their focus. Perhaps this should change, especially in this Global Market wherein they look overseas to maximize their gains at the cost done to Americans.
Their agenda is not for the American people, but to whomever has the skills to help them be competitive in this global economy and keep the profits coming in.
I was against NAFTA and protested it, but like the bail outs, we really have no say in this country anymore and big business calls the shots.
To fix it, I propose fines then jail time for repeated offenses for politicians that accept bribe money from lobbyists. The majority in this country do not have the financial power these titans have to sway things in their favor. After all, these lobbyists for these corporations are not for America but use our government in the pursuit of more profits here and abroad.
I also propose a tariff on incoming goods into this country. While some may argue it was a bad idea in the 30’s which would be correct, it would be a great idea now. We were a heavy exporter then, while now we are import heavy. I think this would stem the tide for awhile in order to allow us to acquire a new strategy.
If nothing is done, then the race to the bottom full speed will continue. As Indians, Chinese and other nationality’s become more educated and are willing to work a lot less than Americans, business will pursue those people in the name of higher profits. Our standard of living will fall further, and deflation will have to go much lower in order to come into balance with the rest of the world.
That means the costs of higher educations, medical, and housing are on the chopping block and will have to deflate to realistic levels to account for the stagnating wages and higher demand for jobs.
With that in mind, it is not financially savvy at this point in time to spend boat loads on an education since due to global competition you’ll find your returns severely diminished over time. This was not so in the past, but current trends are leading that way. The government needs to get out of the way and get off of federally funded higher education and Medicare so that these can be allowed to drop to realistic and affordable levels.
We were sold awhile back that with higher education, we would all be more prosperous than our parents, but its becoming quite clear that higher education is a must just to survive, while the corporations rake in obscene profits through volume from the global market.
I think its time we eliminate the too big to fail corporations, investment banks and other shoddy schemes and get back to the mom and pop small business that benefited everyone rather than just the top 1%.
That is correct. The business is obligated to follow the applicable laws and return a profit to the owners of the business, otherwise known as “shareholders”. As **Magiver **pointed out, ultimately these are decisions governed by the laws of accounting and basic math.
It’s a common meme that businesses are all shortsighted and run by morons who can’t think beyond the next fiscal quarter. I’m sure it’s true for many businesses, but certainly not the most successful ones.
By the way, profits are a good thing. When a company is profitable, people get to keep their jobs.
Certainly businesses shouldn’t be allowed to act in a manner that is reckless or dangerous. Especially if it “kills people”. That’s why we have laws and lawyers and lawsuits.
As it should be. All this talk of “helping the American people” and “cost done to Americans” is sort of vague and nebulous. Companies “help the American people” through the products and services they sell. If you aren’t bring skills that help them invent, market and sell those services in some way, why does the company need you?
Again, this spectre of some monolitic “big business” manipulating everything is a bit over the top. In what real ways does business “call the shots”?
Profits here are good for America. Do you think the interests of the majority are served by punishing large companies that hire thousands of people?
Protectionism is still a stupid idea now for the same reason it was stupid during the Great Depression.
I would be in favor of no corporate taxes but increasing income tax on the top 5%. Encourage companies to put more money back into the company and less into massive salaries and bonuses.
If you think the way to be more competetive is to be LESS educated then you are very foolish. Most experts seem to think that as the economy improves, it will be the skilled and educated workers who benefit. Not the unskilled drones whose jobs were replaced by automation and outsourcing.
We need people to be MORE educated and BETTER educated in the sciences, engineering, business and other practical subjects. Far too many people are going to expensive colleges for a 4 year party studying bullshit. They have no useful skills when they get out so they go to law school.
Nonsense. Getting rid of “too big to fail” companies sounds like a great idea until it means putting 50,000 out of work. Remember how people bitched in the 80s when the corporate raider types bought up weak companies and dismantled them? Maybe the government should break up those Too Big 2 Fail companies under anti-trust laws before they get that big. Or maybe they should be allowed to fail so they can break up on their own.
All I can do is laugh at such whimsical thinking. I just don’t believe that ignorance about the process by which business actually functions in this or any other country can be fought…it’s a lost cause, since these threads pop up all the time, and the same people say the same silly things every time.
That’s true. Business exists to make profit. Jobs creation is merely a side effect. When businesses are doing well, when they feel confident and comfortable with the immediate future they expand…when they expand they invariably need to hire more people (or they need to invest more heavily in automation). When they feel uncertain about the future, when they don’t know what their costs are going to be they contract, and that means they shed jobs, don’t invest in upgrading technology, and go into a more wait and see attitude. They do both of these things in order to try and maximize profits, not out of either the goodness of their hearts OR because they are comic book evil villains. Granted, ‘profit’ is a dirty word in these sorts of threads, so MMV.
Small businesses aren’t hiring because they are uncertain of the immediate future, or what directly Obama et al are taking us. They don’t know if their taxes are suddenly going to go up, they don’t know exactly what the costs of the new health care reforms are going to be on them in the short, medium or long terms, they don’t know what the economy is going to do (double dip inflation? more recession? a modest increase? a boom?)…and so, in their uncertainty they are reluctant to expand less they get caught in one of the unknowns and thus loss a lot of money AND have to lay off all the people they have hired plus maybe some of the ones who are currently working. Why this is hard to grasp is beyond me…it seems so simply and obvious that I truly don’t understand where the disconnect is.
Because hiring people means more production (or more service, or more of whatever the business in question does to make a profit), which means more profits…IF the expansion is successful. You can’t simply expand and expect the profits to come in, however, and there are a lot of unknowns: Will people be buying more of my products? Will taxes go up and thus impact those profits? What effect with the new health care reforms have on the bottom line? What will the economy and the stock markets be doing, and what effect will THAT have on my own bottom line? What new initiatives might Obama et al push through to ‘fix’ the various problems, and what effects will those have?
There is a lot of uncertainty about what’s going to happen in the next year or so, and businesses, big or small don’t know what will happen or what effects the situation will have on their bottom lines.
And if they want to open up a new restaurant? Do they simply spread their existing staffs thinner and thinner? That’s what expansion is…it’s not hiring more staff to sit around doing nothing, it’s building a NEW restaurant or a string of them, which entails…yep, hiring more people. Trouble is, if you don’t know if you can make more profit by building more restaurants, then you are going to be disinclined to build more restaurants until you are more certain they are going to make you money, because the title of your OP is correct…Business isn’t a make work project, it’s not about altruism, it’s about making a profit.
I’ll give a for-instance: For some time now there has been an iHop under construction in one of the towns near where I work. It’s been under construction for something like 8 months now. For many of those months it was just sitting there not getting built. Why? Most likely because of the uncertainty in opening the thing. The closest iHop is maybe 20 miles away, and I’ve noticed that business had fallen off…where you used to have to wait a minimum of an hour to get in on the weekend, now you can pretty much go right in. That’s probably a bad thing, even though I have never worked in the restaurant business. However, I’ve noticed in the last month or so business has picked back up (no idea why it fell off or why it’s better now)…and I also noticed that construction has resumed on the new one and it’s almost done now.
No…at this point many businesses are not expanding, and instead they are going into recession mode…they aren’t building new production, they aren’t buying new networks or putting in new infrastructure, and they aren’t hiring a lot of new people. They can do this for a time by small increases in productivity (generally by making the folks still working there do the work of all the folks laid off, but streamlining their business practices, etc), but that means their businesses aren’t going to be expanding…they are going to be standing still. Like I said, they can do this for a while, but eventually it will kill them, since their competitors might expand and thus capture some of their market share. Also, by making people do the more work for the same money, they build up resentment, and when/if the economy DOES turn around those folks will be free to go work for one of their less stupid competitors, which means they lose all that corporate knowledge and have to rebuild their staffs.
Hiring or expanding production facilities is a reflection of demand. A company will fight doing it as long as they can, but if demand persists they have no choice. It is not complicated.
Let’s assume that a business wants money. The more money, the better. If they could have all of the work that they need done, done with one person, they’d do that.
But they can’t.
For a certain amount of work that needs to be done, you need a certain number of workers and there’s no getting around that. Now if you want more and more money and you’re at the minimum number of employees you need to be making the amount of money you’re currently making, then the only way to make more money is to hire more people. Expansion requires hiring more employees. Your average restaurant is happy if it doesn’t die, let alone attempting to expand. But that’s not true for a significant number of businesses. Particularly, any public company is constantly trying to grow. The only way they can do that is by hiring more people.
You say that like someone forced them to hire the workers they had to begin with.
Wages don’t get depressed, which is what Keynes’ was worried about and the problem that economic stimulus packages aim to fix. And when there’s heightened unemployment and heightened market fears, revenues and demand both drop.
That is what I think will happen. It already is to a degree because I have heard more than one story about a company mistreating the employees, and the most marketable employees refuse to put up with it and finding new jobs even in this economy. Which leaves the employees who aren’t as productive or marketable (or as lucky, or as well connected, or as good at bullshitting an interviewer) who can’t find new jobs.
one story was a guy I know who said his company did an across the board 15% pay cut. The response was the best employees left, (because they had an easier time finding new jobs) leaving those who couldn’t find new jobs. The ones who stayed had morale issues.
Mass layoffs result in tons of long term problems.
Anyone who thinks businesses de facto operate with high levels of efficiency has no idea what they’re talking about. I think our cultural obsession with wealth and power is making US business leadership positions more and more appealing to narcissists and sociopaths, which can’t be good for society.
I hope there will be a backlash against plutocracy after this recession is all over. But probably not.
I’ve never for an instant understood how the scary Canadians and Mexicans cause American businesses to somehow act more evilly.
This is a flatly idiotic idea that would be absolute hell on the working class. The only immediate impact would be a terrible drop in the quality of living or lower and middle income families as the price of products skyrocketed and jobs were slashed in response to the immediate trade war that would follow. You’d probably kill thousands of people (nothing kills like poverty.) The main winners of your plan would be… a select number of big businesses! Well done.
I would argue that our education system tends to instill a sense of elitism, entitlement and narcissism in those individuals we position for leadership roles in our corporate structure. It rewards people who are self-absorbed to the exclusion of all other interpersonal relationships.
It’s like this. Since possibly as early as high school, bright students from affluent families are sent to private prepatory schools. They go on to the best universities (where maybe they played sports, joined fraternities and were otherwise involved on campus). Maybe go on to the best business schools. The whole point is to get a job with an elite company and get placed on a management fasttrack.
The mentality instilled on these people is that they are better than everyone else because of the groups they are affiliated with. And because they are better than everyone else, they are deserving of the highest rewards.
This is an important point that people seem to continue to miss. The other point is that the shareholders, who most everyone here seems to speak derisively about, ARE THE PEOPLE WHO OWN THE COMPANY. A corporation exists to be a money making machine for its owners, the people who invested money in it. Not for it’s employees.
