Companies Are Too Scared to Hire
The latest jobs report was a big dud, with the economy creating just 69,000 jobs in May, when economists had been expecting about 165,000. But a quick scan of the world economic environment makes it easy to see why CEOs are cautious and companies are reluctant to hire.
Deciding whether to hire more workers isn’t as complicated a decision as politicians and pundits make it seem. It doesn’t usually involve tax levels or regulatory burdens or vulture capitalism or any of the charges that Mitt Romney and Barack Obama are flinging at each other. Companies hire new workers when they’re needed to help meet demand for whatever it is they sell. If demand is flat or companies worry that it will decline in the future, they don’t hire.
It’s mostly the future that companies are worried about right now. You can’t blame them. The financial crisis in Europe has been festering for several years, but it’s clearly getting worse, not better. Many analysts now place even odds on the likelihood of Greece leaving the euro zone. That might be manageable, or it might be catastrophic.