Economic Factors Affecting the Job Market

Business Productivity: Productivity has been rising at desirable rates in recent years. That is, more business can be produced—whether it is goods or services—by utilizing fewer workers than before. This will be extremely beneficial to the U.S. economy in the long run, but it can hurt the job market over the short term. Productivity is boosted by new technologies, improved management methods and other factors. It can also receive a quick boost from restrained corporate hiring. If rising productivity occurs along with rapidly rising sales and profits, then the job market will improve.

Corporate Sales: For 2010, many sectors, particularly retailing, will find revenue growth hard to come by. This will make many employers much less likely to hire new people.

Corporate Profits: When profits increase sharply, companies are inclined to increase both business investment and hiring. Fortunately, 2004 through 2007 saw steady growth in corporate profits as the economy rebounded. As a result, large numbers of new jobs were created, and the national unemployment rate was extremely low. Profitability took a deep downturn in 2008. Many employers were able to post reasonable profits during 2009, but this was generally a result of deep cuts in spending and hiring. The jobs market has suffered as a result. Hiring will rebound when corporate sales, and accompanying profits, show significant growth. This is not likely to occur in 2010.