Friday, May 6, 2011

Why companies are about to start hiring

In a nutshell, it's because they don't have much choice.

The bright spot in a drab employment picture is that workers have been stretched so thin during the past couple years that companies are going to have to (gasp!) hire more.

You may be understandably suspicious. Corporate America has been raking in massive profits – they flooded in at a record $1.68 trillion annual rate in the fourth quarter of 2010 – with unemployment near 9%. Initial jobless claims are rising again after falling for much of 2010, yet the stock market is just short of record levels. Do companies really want to change this picture by hiring people and paying them and stuff?

The answer is they may have no alternative. The hiring picture is improving largely because the productivity gains that drove the profit rebound and the rip-roaring stock market rally of the past two years are petering out.


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