While the markets digested the latest data on jobs, an exciting trend is strongly emerging- the female workforce has become a productive and essential part of our labor market. The multi-faceted modern day women who can manage a family and balance the demands of a high-pressure job are growing in numbers. The female workforce has more people working in it than 18 months ago. More women over age 55 are back in the workforce because their nest eggs got wiped out and they are helping their families rebuild their financial future. The days of a pure stay-at-home mom for many families is over. We are at the cusp of a revolution here. One lead by women as more and more are becoming the bread winners.
Much like the Great Depression, the male 30-somethings lost their careers when their industry was hammered by the recession. One of the reasons why the female workforce has not seen the jobs hit as men have is because they tend to hold jobs in industries that are not hardest hit by an economic slump. But while women only represent 13 percent of the construction workforce, they are in industries that are about to flourish. 77 percent of the jobs in both the health services and education sectors are held by-you guessed it-women. The new economy requires workers to be more flexible and many women understand that. They’re taking jobs where you can work from home and work non-traditional hours.
We have had 8.4 million people unemployed since the start of this recession and the number of long-term unemployed is 6.3 million. While the average work week is up to 33.3 hours, there is a huge gap between the male unemployment rate (10 percent) and the female unemployment rate (7.9 percent) for those 20 years and older. What’s even more extraordinary is that female employees’ market share of jobs is now 49.9 percent and growing. This dominant trend shows no signs of stopping.
We are in a tough economic climate right now. Small businesses, the jobs generators in our nation, is being strangled by the lack of credit. Banks are torn between the two faces of government: the FDIC, whose regulators are not approving the small business loans because they are too “risky”, and the Obama Administration, which is telling banks publicly to lend to small businesses. The government needs to get on the same page.
So what needs to be done? Our lackluster jobs market cannot be fixed by over-regulating and overtaxing the American worker. Wilbur Ross who has sat down with policy advisers to both Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi has a great idea to help spark job generation. Ross has suggested cutting the payroll costs of a new hire employee between 20-26%. The Federal government would send the company a payment equal to the total with holdings from each new employee’s pay in addition to the employer contribution. This tax incentive would be available to companies who added to their staff since January 31, 2010. Ross uses the example of a worker making $60,000 per year. The rebate would be between $12,000 to $15,600 per job created, costing the government between $24,000 to $31,200. Comparing this to the Obama Administration’s $787 billion dollar stimulus program where supposedly 3.5 million jobs were created, that means it took more than $224,000 to create a single job. And that 3.5 million jobs created has been debated around the country among economists for months so the figure could actually be higher.
The Ross plan has received very little interest in Congress. The closest the government has gotten to something similar has been Senator Schumer and Hatch’s plan to wipe out the Social Security cost, which only cuts a company’s cost by 6%. It’s a nice idea to keep money in the hands of businesses with this payroll tax holiday but shouldn’t more be done? The House-passed “Stimulus II” in December 209 would extend federal unemployment benefits for six months at a cost of $41b. Doesn’t it make sense for a more aggressive incentive approach to encourage businesses?
Since the financial crisis, capitalism has become a dirty word. But it is a capitalistic system that generates jobs. The private sector needs certainty from the leaders in Washington. But with financial regulation, cap and trade and healthcare reform floating out there, many businesses will hedge their positions because they will not know the costs associated with them until they are passed by Congress and signed into law by the President.
In my new book, “Thriving in the New Economy” all of the CEOs I interviewed, no matter what the sector all had a common message: Government needs to work *with* business. Not against it. Wilbur Ross, Larry Lindsey are just two of the many CEOs that I talk to on a daily basis say increasing payroll taxes on states that are already facing multi-billion dollar deficits doesn’t help. Long-term tax increases will poison a state’s business climate and suffocate employers. Tax cuts are the answer. What is killing the system is the lack of tax breaks for r & d, payroll cost cuts, and capital investment. Tax cuts gives businesses a break. That break can give them the money they need to hire. Innovation can not be forecasted, but there needs to be encouragement to innovate. It’s the CEOs who innovate their business that are the leaders of today and tomorrow.
There are many moving parts to the jobs equation and one of the biggest factors missing here is the consumer. Even with tax cuts, companies will not hire if their current workforce is already meeting demand. We need to get the consumer back. We all know the consumer makes up over 70% of the economy. But consumers are not spending like they had been in the past because they are afraid they are going to lose their jobs. The savings rate is up for a good reason. In the go-go free-wheeling days of credit, consumers were using their houses like ATM machines. They have now learned from their over-leveraged ways (I hope). But if we don’t have demand, companies are not going to hire just for the sake of having a larger staff. It’s all about efficiency. Our productivity numbers are proof of that. But, if the consumer does come back and the present workforce can’t keep up with demand, then you have the makings of a hiring boom.
Americans are tired of hearing about how many jobs were “saved” by the stimulus. As Larry Lindsey points out in my book, those are just numbers which we all know can easily be manipulated.
The unemployed want to see real job opportunities.