(Un)employment Outlook

Posted on July 24, 2009

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With apologies in advance for posting something of a downer just before the weekend, I wanted to add a brief postscript to my post earlier this week about the recent Watson Wyatt salary budget survey for 2010.

Writing in today’s Wall Street Journal, former Fed vice-chairman Alan Blinder makes the case that if the economy hasn’t yet reached rock-bottom, it’s pretty close. But here’s his take on what that means for employment:

What’s more, GDP is not terribly meaningful to most people. Jobs are—but they will take longer, maybe much longer, to revive. The last two recessions, while shallow, illustrated painfully that job growth may not resume for months after GDP bottoms out. And the unemployment rate won’t fall until job growth rises “above trend” (say, 130,000 net new jobs per month). That’s a long way from where we are today. So, even though the economy may be making a GDP bottom about now, the unemployment rate will probably keep rising for months—which is bad news for most Americans.

More support (unfortunately) for the idea that increases in employee compensation (at least outside of investment banking and a few other fields) will likely be quite modest for some time to come.

To learn more about the survey, you can take a look at the press release, as well as read what Ann Bares and John Hollon have to say on their blogs.

Posted in: Compensation, Economy