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Unemployment and More Jobs

by Ken Vincent, Featured Contributor

THE FIRST THING that we must accept is that the 6% +/- unemployment rate fed to us by government is not reflective of the economy. U-6 shows an unemployment rate of about 12% which is more reflective of the true unemployment.

Job Search -gettyimagesBut moving past that issue there are two questions being bantered around. First, why are so few jobs being created now that the recession is supposedly over? 140,000 to 200,000+ isn’t enough to absorb those needing work. Second, why are most of those jobs in the lower pay ranges verses high paying positions?

Here is my opinion on the two issues.

It is pretty much a given that most employment is provided and created by small and mid sized businesses. Those businesses today are faced with:

Rising health care costs and a great deal of unknowns as to the future commitments of health care; Uncertainty as to where the minimum wage push is going and what that will do to their payrolls; and A never ending steam of rules and regulations that create not only increasing costs, but a wave of uncertainty as to what the future will bring.

Why the flood of rules and regulations? Well, any agency head can tell you that the more rules and regulations his agency creates, the more manpower he needs to follow up on them. The more manpower needed, the more budget. The bigger his agency budget the more political power he has and the better his pay and benefit structure. It isn’t complicated.

To compound the above issues many companies have learned that creating low paying jobs is less expensive that high paying jobs. You can actually hire two or three part timers for $8-10 per hour instead on one person at $50-60,000 per year. As an added incentive those part timers don’t get health insurance, sick leave, paid vacations, or maternity leave. Okay, one could argue that the 50k person is more talented that the part timers. Not necessarily so. There are a lot of very talented young people out there that are desperate for work, not to mention a few million of retirement age that want only part time work but bring a lot of talent and experience to the table.

So, what can we take away from those considerations?

  • Don’t believe what the government says;
  • Many government actions have an ulterior motive;
  • Government is not necessarily the friend and supporter of business;
  • Uncertainty is the worst enemy of economic recovery and growth; and
  • The recession isn’t over until it is over.

So, what is your take on all that?


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Ken Vincent
Ken Vincenthttp://sbpra.com/KennethVincent/
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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