Confidence is what is needed to get employment on track, said Philip Kirschner, president of the New Jersey Business & Industry Association, representing 22,000 New Jersey employers.
Because Kirschner's organization represents so many employers, I asked him to be part of my panel of experts who opined in Sunday's Inquirer on employment and the economy in the wake of the most recent statistics from the U.S. Labor Department. You can read my Saturday Inquirer story on the Labor Department's report by clicking here.
Because of space limitations, I wasn't able to print everyone's complete response, so I'm publishing them in my blog this week.
Is this the new normal?
No, nine percent unemployment is not the new normal. However, for the short term, the unemployment rate will remain higher than we're used to seeing.
The problems that led to high unemployment, especially the collapse of the housing market, aren't going to disappear anytime soon. Companies were forced to get very lean and much more productive in a terrible recession, and they're not going to start hiring in any great number until see a consistent pickup in their sales and orders for at least five to six months.
Longer term, history has shown our economy to be resilient. At some point, pent-up demand will unleash spending. While the new normal for unemployment may not be five percent, I think a 6 to 6.5 percent rate is achievable.
What will encourage hiring?
The key ingredient that will get people hired is confidence. In order to starting hiring at higher levels, businesses have to see six or more months of a steady increase in their sales. The pattern we've been seeing over the past 2-3 years is a few good months followed by a few bad months. This does not inspire confidence. It's the same thing for consumers. Most households aren't going to spend freely when they have to pay so much for gas and food and it's hard to make their monthly mortgage payments. Consumer confidence understandably remains low in this kind of environment. Since consumer spending drives two-thirds of economic growth in this country, the economy won't really get rolling until consumers feel confident that they have enough income, and it's secure.
A number of things need to happen that unfortunately are beyond the control of government. Gas prices have to come down, and the housing market has to fully recover. Unfortunately, we're not seeing a lot of daylight in that sector yet. Businesses need to see more stability and less uncertainty overseas as well, for this impacts exports, and they need to see more common sense coming from Washington.
Here are links to the other experts:
Monday: Nathaniel Robinson wants a job driving. He is one of the profiles of unemployed people in the Looking for Work series
Saturday: Tara Weiner, managing partner of Deloitte in Philadelphia.