Untouched and barely chastened in the horrific debt-ceiling impasse was corporate America. There was little – if any – talk of what role business could play in offsetting the impact of a running deficit. The private sector was absolved of its role in exacerbating the current economic climate due to lack of hiring. As Washington politicians wrangled and strangled over what to do about reining in a $14.3 trillion hole that has left the globe spooked about U.S. economic direction, the issue of jobs was an afterthought.
The conversation now appears to pivot in the direction of unemployment – where most observers agree it should have been in the first place. Already looming over discourse like an ominous set of storm clouds is recent jobs data showing the “fundamentals” might not be as strong: ADP’s private payroll report showed nothing to make a dent in the 9.2% unemployment rate with 114,000 jobs added. While the White House is certain to make a decent spin on it based on the official Department of Labor report showing 117,000 jobs added (“jobs were added … right?”), ADP’s CEO unleashed Debbie Downer on any parade.
“Today’s report shows modest job creation for the month of July at a rate of half what is needed for meaningful employment and economic recovery,” was ADP Chief Executive Officer Gary C. Butler, brooding over what’s next.
Half the job additions hailed from small businesses stepping it up (58,000 more hired) with medium businesses getting into the mix with 47,000 hired. What tore into any positive expectation was the very intense round of large company layoffs by corporate icons like Merck, Cisco, Boston Scientific and Lockheed Martin, as well as the bankruptcy of once-famed-now-defunct Borders who announced 10,000 layoffs. All these employers accounted for nearly 60% of the 66,000 layoffs in July.
So, in reality, there was only a net gain of 51,000 jobs during July.
While Capitol Hill was embroiled in a mess over the debt ceiling, little was being said about the layoffs and what to do. Lawmakers, White House included, may have missed an opportunity to lay thick into companies hoarding $2 trillion worth of cash and other resources, according to the Federal Reserve. All fingers point to lack of confidence and abundance of caution as opposed to willingness to spend cash on hiring. Lost in the debate was any creative thinking or a simple recipe whereby companies hiring or pledging to hire could have actually changed the debt dynamic.
After all, more hiring means more jobs. More jobs = more payroll = more tax revenue and, oh yeah, more spending. Spending leads to more profits for companies. And the economic wheel goes round and round, round and round.
Corporations in the U.S. don’t see it that way based on recent data – or maybe they do. Observers quietly whisper of the “double standard” or company caution really being part of a shrewd political strategy to insert “business friendly” interests. The possibility that in the quest for diminished government regulations, a corporate lobby is willing to sacrifice the greater job growing good. Once a new face (no racial pun or hint intended) is in the White House, the hiring spree begins and global markets can breathe a little easier that brand-obsessed, obese and SUV-driving Americans are back at their game of buying bubbles, chewing up everything from overpriced homes to the latest electronic gadgets.
“Corporate caution will only represent a further weight on the economy, which has seen consumer spending depressed by a stubbornly high unemployment rate that has held near or above 9 percent for most of the past two years,”warns Scott Malone and Mike Tarsala in a recent Reuters analysis.
Many wonder why no one on the Hill wanted to talk about that. In the ideological revolution for “smaller government” fiscal conservatives talk of lowering taxes to spur private sector hiring – but, no talk of how cash-hoarding companies won’t even do that.
In the meantime, the unemployment rate remains stubbornly high and the President faces a history where no President gets a new term if the jobless rate is above 7%. Barring anything Rooseveltonian on his part (which he shows no stomach for doing) or a dramatic economic miracle, it’s not looking good. Congress shows no appetite for any talk about job growth, either out of exhaustion from the debt-ceiling impasse or simply because they’re more concerned about taking a needed August recess so they can go back to their districts and fundraise.
Even Congressional Black Caucus members spearheading a 90-company 10,000-hire target jobs tour are really using the initiative as a way to boost polling numbers before unexpected primary challenges or redistricting woes show up in 2012.
“We’re still in the same position we were in before the debt-ceiling debate,” argues William R. Miller IV, Founder and CEO of Ross Associates, a strategic communications firm based in Philadelphia. Miller is old school political hand familiar with many a campaign in the City of Brotherly Love and beyond. In a recent conversation with Politic365.com, Miller describes the topic of poverty as being overlooked and dismissed. It’s the product of continuing joblessness and it looks to get worse without any “responsible discourse by any public official about it. Philadelphia has one of the highest urban poverty rates in the country.”
The premature summer vacation for Congress is unfortunate: not a good look, of course, considering Capitol Hill should be immediately refocused on jobs in general. But, maybe, Congress really can’t bring itself to admit not knowing what to do about that and has opted for an easy, temporary out.