New Job Creation

A lot of new jobs are emerging. 372,000 last month (June 2022). Some companies are reducing staff. How can both be happening at the same time? Because…let us see.

First, we have said in this space many times before, the pandemic caused massive unemployment. Remember when 22 million jobs were idled in the early months of the pandemic? Well, it happened. Many of those jobs came back a few months later, while many jobs were lost forever. The latter happened because the pandemic demonstrated how working from home had great results when none were expected. Online work soared and proved itself highly productive. Overhead costs plummeted at the same time. employers pivoted to cut costs, improve productivity and redesign business processes.

Emergent jobs were partly the result, but new technology demanded new job skills. The previous workers were not as adaptable as new, younger folks who already had the mindset of the new technology. Old career patterns ebbed while newer ones grew exponentially.

We have had over two years of pivoting experience caused by the pandemic. In that time businesses and public institutions have had the time to redesign their routines, processes, products and services. The new jobs being created are the result of this fresh reality.

Our economy is changing and investing in that change. This is what we should be doing. Work patterns will follow. It is up to both the employee and the employer to know and understand pending change and adapting to it. Training and development programs are a must for both.

What effect on inflation might this have? Glad you asked! There is much hidden unemployment – early retirees, people giving up and working maybe two part time jobs for low pay, and those who live with family with little or no income. These people feel the pain of inflation acutely, but they also keep a lid on runaway inflation. New jobs help the economy recover from previous lows due to the pandemic and economic disruptions caused by war and natural disasters. New economic life from investing in new job formation buoys the economy.

This is not a simple process. Several underlying currents are living out their own cycles. Another cycle to watch: underemployed people often decide to start their own small businesses. At last count SCORE was creating about 140,000 new jobs annually in helping form new small businesses. That is a drop in the bucket, but small businesses percolate to double or triple their employment in early years of operating. If they survive, they will expand to many times their early employment numbers.

New jobs are a natural feature of our economy. The number varies at any given time depending on economic conditions. In fact, poor economies often spur creation of new businesses and new jobs. Just watch the data!

July 13, 2022

 

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