Thursday, October 22, 2009
Example: The number of newly laid-off workers filing claims for jobless benefits rose more than expected last week.... as employers remain reluctant to hire even with the economy showing signs of recovery.
Where do I start?
While the two - employers shedding jobs and employers who aren't shedding jobs but are reluctant to add to staff - often take place around the same time (hint: tough economic conditions), they aren't directly related to one another... the latter doesn't follow the former nor does the former follow the latter.
Furthermore, the statistic being reported this morning is of newly laid off workers which is not affected by whether other employers are hiring. The overall employment number is a mix of lay-offs balanced against new hiring, but that isn't the statistic being reported.
To further the sin, the reporter writes that the number of layoffs is a gauge of "companies' willingness to hire new workers". It is, but in such a weak manner as to be relatively useless. Companies lay off staff when they feel they have too many employees for what they forecast will be the demand for their products and services... and they do so until they feel they've reached an equilibrium between staff levels and projected revenues. Hiring, on the other hand, results when employers feel current staff levels are too low for what they project as future revenues and workload. Obviously, companies won't be hiring until after they've done all the shedding of jobs they think they need to do, but hiring doesn't necessarily follow layoffs.