A Gallup survey that tracks jobs creation found that, after a spike during 2013, jobs creation leveled off in May and has remained at a plateau ever since.
Gallup uses a jobs creation index based on companies that are hiring, ones that aren't, and ones that are letting people go, to track the trend.
During the depths of the recession, only a quarter of respondents said their companies were hiring. That increased to 41 percent in August — just above the 40 percent who said their companies were not hiring. Meantime, the percent of those letting people go sits at 13 percent — the lowest since pre-recession times.
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The August index at +28 tied the six-year high reached in July, and is up from +22 last August. Much of the gain has been driven by reignited government hiring, mostly at the state and local government levels, Gallup said. Government hiring has showed much more strength and momentum than private sector hiring since the first quarter of 2013.
While Gallup said the overall trend was a good one, its researchers found the stagnant gains since May possibly worrisome.
"Unchanging job creation is good news in the sense that the recent gains are holding. However, this steadiness could be a troubling sign if the lack of improvement continues, indicative of persistent weakness in the economy. This is particularly true for private-sector job creation that has been fairly flat over the past two years," Gallup said.
Another Gallup study focusing on start-up business may explain part of the slow pace of job creation. The survey revealed that the number of start-up businesses, as a percent of all U.S. businesses, has reached historic lows, primarily because the decline in overall personal savings has left would-be entrepreneurs without the funds they need to launch a business.
"After a few years of stronger personal savings from 2009 to 2012, the personal savings rate fell in 2013 and 2014," Gallup reported. "This drop suggests that even if the personal savings rate and the rate of business startups pick up from 2013 to 2016, the U.S. may still see a decline in new business startups in the following years. The U.S. personal savings rate and the business startup rates remain well below the levels in the 1970s and earlier. Unless Americans start saving more — and there is an uptick in the U.S. personal savings rate — American entrepreneurship remains at risk."
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
