It is concerning that jobs are not growing. Economic indicators reveal that jobs are still lagging. The economy cannot recover until and unless more people become employed. The month of July has seen a worse-than-expected loss in jobs and that is a result of the temporary census jobs that have closed up.

Though July has seen a gain of 71,000 private sector jobs, it still falls below the expectations of economists. It is very obvious that jobs do not pick up until the economy does, but then there is something very unusual about the 2008-2009 recession. In 2001 as well, the world experienced a recession. But then it was not the same then as the economy experienced a business-led slowdown.

This current recession has a shortage of jobs. Last October, the economy experienced a 10.1% unemployment rate and currently it still prevails as 9.5%. During the last downturn, the unemployment rate never reached even close to 9.5 % as the highest
unemployment rate then was 6.3 %. “Coming out of a credit crisis, recoveries tend to be much weaker. I don’t anticipate a strong bounce in jobs or the economy,” says, Bill Seyfried, professor of economics at Rollins College.

It is very unlikely for the economy to improve until and unless more people are back to work. Consumer spending is another important driver to get the economy moving in the short term. Therefore, consumer spending has to increase at a decent rate. But it is very unlikely to happen as big businesses, in-spite of having a huge cash balance, won’t be hiring until the consumer spending increases. And how can people start spending, when there is either no job or a high–paying job or employees having concerns about holding on to their jobs?

Sean Snaith, director of the Institute for Economic Competitiveness, University of Central Florida, says “It is a chicken vs. the egg dilemma, but the weakness in the labor market reflects a gradual and slow recovery. The aftermath of the long recession has left scars on consumers and it’s going to take time for them to heal.”

The current scenario is grim as both consumers and businesses are waiting for the other to make the first move. Businesses should be brave to hire and make consumers more confident so as to help create demand. Bill Cheney, chief economist at John Hancock Financial says, “The real problem is not that employment lags, but that it’s lagging too much. At some point, jobs have to kick in for the economic engine to really work. Each month is like a little bit of torture where there are reasons to worry even more.”

The recent recession was deeper than previously thought, according to new data released by the Commerce Department. The numbers show the sharpest declines in consumer spending and the housing market.

The U.S. economy shrank 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009, compared with the 3.7 percent drop previously reported, said Bloomberg News. 

Household spending fell 1.2 percent in 2009, twice the previous projection. Consumer purchases, which account for 70 percent of the economy, shrank the past three years, with the lowest spending point being last year, said Bloomberg.

Personal and disposable income levels actually rose between 2007 and 2009, according to the Commerce Department report. Higher income and less spending indicate American’s are putting more of their money into savings.
Economist Stephen Stanley told Bloomberg that consumers are adjusting to a “more rational spending philosophy.”
In a piece of good news, the economy grew 2.4 percent annual rate from April through June this year, according to the Commerce Department. The rate of expansion in the first quarter was 3.7 percent, higher than the 2.7 percent gain previously predicted. 

The on going recession and need to cut cost has forced Small and Medium Businesses (SMBs) to start looking to set up their base in India.

After the first wave of the large-cap multinationals, it is the turn of the small and medium enterprises (SMEs) ranging in size of US$100- $500 million from these two continents to step into India. Some of these companies are family-owned.

Some of these companies are in the area of technology, clinical research, auto design and ancillary and pharmaceutical sectors

Other sectors that could be part of this trend are aerospace, pneumatics, banking and financial services, machine tools, industrial designing, retail, logistics, web services and content generation.

According to recent survey done by a major recruitment company in India about one-third of the SMEs in Europe and the US are now turning to India and China

These companies are looking at value-added off shoring from these locations as well as to be closer to the customer and because of the stringent labor laws in Europe.

This development will heat up the talent search market in India and will provide job seekers with new avenues of growth

According to Mr. Aroon Raman, Chairman-CII Karnataka State Council, European SMEs, faced with a stagnant market in their home countries, are turning towards India and China, where there is promise of 8-10 per cent growth. Besides this, companies reap the benefit of high-quality labor and cost advantage at these places.

Key Challenges: One of the key challenges for SMBs trying to set up base in countries like India and China is lack of brand power pull as talented people in these countries still prefer to work for bigger Multinational Brand names. Besides this the rising cost of renting out real estate cost combined with rupee getting stronger against front line currencies will lower the cost savings for these companies.

Another issue is a sharp wage inflation coupled with poor basic infrastructure in India which can trip off a lot of these companies trying to set up base in India.

In China the language and cultural barriers coupled with unpredictable govt. policies lead to business uncertainty which can be fatal for the SMEs.

New data from payroll companies suggests that small businesses are slowly beginning to add employees, even as the most recent Labor Department report shows the unemployment rate held steady at just under 10 percent. Some economists believe these numbers indicate the recession is bottoming out.

Based on data gathered from Intuit’s online payroll service, companies with less than 20 employees have added jobs since June 2009, said Business Week Additionally, data from SurePayroll shows the average paycheck for workers at businesses with fewer than 100 employees has stabilized, said Business Week.

President Obama has put forth a number of measures intended to get people back to work, including tax incentives for businesses that hire new employees and pushing banks to free up more credit for small businesses.

John Bishop, a labor economist at Cornell University, told Business Week that temporary incentives like tax credits could create more than 2 million jobs in a year.
“It potentially has a huge effect, and small business would be the primary beneficiary of that,” Bishop told Business Week.

The recession has reshaped the job market, and even in a recovery some of the 7.2 million unemployed workers in the U.S. will find their former jobs no longer exist, said the Wall Street Journal.

Many of the construction jobs created by the housing boom will probably not return, which spells trouble for men without a college education. More than 1.6 million construction jobs were lost in the past two years. And many high-paying jobs in the financial sector may not be coming back, said the Journal.

The recession also hastened the end of jobs that were already becoming obsolete thanks to advancing technology. The ranks of administrative and clerical workers fell by 10 percent in the past two years, and even as the economy recovers many of those tasks will become automated, said the Journal.

The permanent loss of these jobs will likely slow a recovery, as it will take time to create new types of jobs and retrain workers to do them, said the Journal.

With the collapse of secure corporate jobs, more people are pursuing an entrepreneurial path, says Entrepreneur.com.

The Kauffman Index of Entrepreneurial Activity, which measures new startups, shows a slight rise in the creation of small businesses even since the recession began, and that is expected to continue through 2009, according to Entrepreneur.com. About 1 million people a year become self-employed, and enrollment in entrepreneurship programs at universities is up.

But how does this square with the hits small businesses have taken in the past two years?

Many experts say that the recession is actually the perfect time to begin planning a small business startup. Office space and supplies are cheaper; with larger companies closing or downsizing, there are service gaps in many areas; and with the high unemployment rate there are plenty of talented people looking for work and ready to hustle.

While entrepreneurs may not see an immediate payoff, smaller, more flexible and creative companies are the business model of the future. And new technology will be the key to creating this new entrepreneurial society.

“Suddenly, you don’t have to have a large physical plant to start a company,” Michael S. Malone, author of “The Future Arrived Yesterday: The Rise of the Protean Corporation and What It Means for You,” told Entrepreneur.com. “The cost of entry is getting close to zero — now the little guys can build a business without the overhead. The best strategy is to get small and adaptable, strip things to a solid core and hire from the cloud of talent out there — then blow up like a puffer fish when you encounter a potential market.”

A drop in the November unemployment rate provided a glimmer of hope that the unrelentingly bleak job market may be headed for a turnaround.

The unemployment rate unexpectedly fell to 10 percent last month, from 10.2 percent in October, as employers cut the fewest number of jobs since the recession began. The average work week and earnings also rose in November, the Labor Department reported.

The economy shed 11,000 jobs last month, an improvement from October’s revised total of 111,000 lost jobs, and significantly better than the 130,000 Wall Street economists had expected in November, said the Associated Press.

Economists say that substantial job growth is needed to make a dent in the unemployment rate. According to the Labor Department, 15.4 million unemployed people are seeking work, and 11.5 million others are working part-time but want full-time jobs or have given up job hunting altogether.

In a troubling sign for small businesses, a survey by the National Federation of Independent Business showed more small companies plan to reduce employment in the next three months than plan to add jobs, said the AP.

The number of women making more money than their spouses is on the rise, and the recession has contributed to the shift in earning power, according to recent statistics from the Labor Department.

In 2007, nearly 26 percent of wives earned more than their husbands when both worked. Among all married couples, including those where the husband isn’t working, 33.5 percent of women earned more than men, said MSNBC.com.

Significantly more men than women have lost their job during the recession. Of the 7 million unemployed people in the country, nearly three-quarters are male.

While more wives are becoming the primary breadwinner in their households, women on average earn 77 cents to every dollar a man makes, according to a study by the Families and Work Institute.

Another study found that the majority of both men and women said they are “very comfortable” with a wife earning more than a husband, but many couples say the situation can present some problems. Some women feel guilty about spending less time with their children; and men, whose self-esteem is often tied to their jobs, can feel confused and depressed by the new family dynamic.

But for most families, staying afloat financially trumps other issues.

“I’m very glad I didn’t listen to all those teachers in the ’70s (who said), ‘Oh, don’t worry, your husband will take care of you. Oh, don’t worry about getting an education,’” computer programmer Beth Klingensmith, 45, told MSNBC.com.

Many small business owners and trade groups that typically oppose minimum wage hikes were relatively quiet when the most recent increase took effect July 24, raising the national minimum wage to $7.25 an hour from $6.65 an hour.

Small businesses complain that mandatory wage hikes hurt their bottom lines, forcing them to raise prices or impose cost-cutting measures, including layoffs. But the National Federation of Independent Business said that most businesses pay more than minimum wage to attract the best workers, and 21 states already have minimum wage requirements above the federal level, according to MSNBC.com.

While economists believe the wage hike will have little effect on the economy overall, teens and young adults, as well as workers in rural or poor areas, will likely suffer the most when employers make hiring decisions, said MSNBC.com.

Phyllis Knueven, who owns a grocery store in Illinois that employs several teens, told MSNBC.com she could hire more experienced and flexible adult workers for $8 an hour.

Teens and young adults have already been hit hard by the recession; the June unemployment rate was 24 percent for 16- to 19-year-olds and 15.2 percent for 20- to 24-year-olds.

Many Americans eager to pack up and move to another town or city are being forced to stay put due in large part to the weak housing market, says an MSNBC.com article.

The U.S. is a historically mobile society. The most movement happened in the 1950s and 60s, when about 20 percent of the population moved each year. The percentage of people changing residences fell to a historic low of 11.9 percent in 2008, according to U.S. Census data.

Because many people are having trouble selling their homes, they can’t relocate to an area where jobs are more plentiful.

“The labor markets are sluggish. They’re not adjusting efficiently,” economics professor Richard Cebula told MSNBC.com, adding the situation “exacerbates a recession.”