Friday, April 3, 2009

Mean Street: The Coming Obama Jobs Disaster


It is tough to be too gloomy the day after the Dow industrials soared another 3%, but spare a moment’s thought for the unemployed.

It is bad for them and will get worse. Unemployment will easily hit 10% by year end.

Of course, President Obama and his advisers don’t see it that way. They forecast unemployment topping out at around 9%. But why trust them? Of Obama’s 22 Cabinet level bigwigs, including the biggest wig himself, none has had a sustained private-sector career.

They are government lifers. And they are living in a fantasy world of think tanks and policy papers where government spending magically leads to business hiring. Unfortunately, it doesn’t work that way.

Soon enough, Obama’s dreams of job creation will turn into an unending nightmare of double-digit unemployment. Look at the numbers. Thursday’s jobless claims hit a 26-year high. This morning’s jobs numbers were predictably awful. The economy lost 663,000 jobs in March, and unemployment jumped to 8.5%.

Ask anybody running a business. They will tell you they expect the job market to get even worse. After all, much of what any CEO does is think about hiring and firing. And lately, CEOs are pretty focused on the firing part of the equation.

In my career, I have fired dozens of people. These are terrible, gut-wrenching decisions that keep you up at night. They also are the most necessary. Unlike governments, businesses have to turn a profit. That is why thousands of American bosses are firing millions of their workers. Not because they want to. They have to. No profit and you are out of business. Then everyone’s out of work.

The reluctance to fire in hard times leads inevitably to a reluctance to hire once the economy picks up. Even when the profits are rolling in, you still need a compelling reason to hire.

Unfortunately, Obama has given CEOs plenty of reasons to fire and none to hire.

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