Pardon my gloom, but it’s not clear to me where an employment recovery will come from–at least in the United States. All the indicators we have show that employment is scraping along the bottom. With 20% of the United States working-age population un- or underemployed, according to the Gallup Poll’s massive survey of 20,000 households, and establishments running at bare-bones level, it would be hard to envision significant declines in payroll employment from already miserable levels. But the sort of things that generate jobs–venture capital investments, small business expansion, and so forth–are as dead as the Monty Python parrot.

We’ve seen pickups in a few kinds of hiring, but they are unlikely to have measurable impact on US unemployment.

For example, Monster.com reports a 10% increase in online advertising in February following the usual seasonal drop in January, but improvement is in the noise range relative to the previous decline.

The majority of small business owners plan to decrease spending, according to the February Discover Small Business Watch:

• 49 percent of owners have experienced cash flow issues in the past 90 days, down from 51 percent in January; 47 percent of owners have not experienced cash flow issues, and 4 percent are not sure.
• The number of small business owners who think the economy is getting better is unchanged in February at 31 percent; 44 percent see the economy getting worse, down from 46 percent in January; 24 percent see the economy staying the same, up from 18 percent last month; and 1 percent are not sure.
• 25 percent of small business owners see conditions for their own businesses getting better in the next six months, down from 29 percent in January; 37 percent see conditions getting worse, down from 43 percent in January; 34 percent expect things to stay the same, up from 23 percent in January; and 4 percent aren’t sure.
• 4 percent rate the economy as good or excellent, down from 8 percent in January; 36 percent rate the current economy as fair, and 57 percent rate it as poor.

The National Federation of Independent Business, meanwhile, reports that actual sales and pricing power have consistently underperformed expectations. 26% more respondents reported lower sales than higher sales in February, and 20% more reported lower prices than higher prices. And slightly more expected to cut employment than increase it.

Call center and similar employment is expanding in Asia rather than in the U.S. Asia Times Online reported recently,

Business Processing Outsourcing firms in the Philippines are hiring new personnel on expectations of strong business growth from the United States and Europe. Convergys Corp, an American customer support service provider that operates 12 sites across the country, says it plans to expand its 20,000 workforce by 6,000 employees this year. Stream Global Services, another BPO firm, says it plans to add 5,000 workers this year.

Revenue growth in the Philippines’ BPO sector, which averaged around 40% annually between 2002 and 2007, slowed to around half that pace in the wake of the global economic crisis. The overall sector accounted for 3.5% of the country’s gross domestic product in 2008 and generated US$7.2 billion in revenues last year, up by 19% year on year.

The government says it expects BPO revenues to hit $9 billion this year; industry representatives estimate revenues will reach $12 billion and employ 700,000 workers in the Philippines by 2011. The sector employed 442,000 workers as of the end of 2009.

There will be an uptick in manufacturing employment in sectors that benefit from expansion in Asia and some other emerging markets, but since manufacturing is only 15% of total employment, the macro effect will be small.

Macroeconomists who expect a normal business cycle have misunderstood the nexus between small business expansion and real estate. A small business owner starts by using her home as collateral for a business loan, and then buys commercial real estate and levers it further. With the continuing catastrophe in both the residential and commercial real estate markets, small business capital has imploded. And small business surely isn’t getting help from the banking system, where loans still are contracting at the fastest pace on record:

And the decline of total commercial credit from the banks remains off the charts:

Venture capital funding, as Price Waterhouse reports, remains minimal relative to historical standards. The fourth quarter of 2009 showed only $509 million in investments, compared to $804 million in the fourth quarter of 2007.

Key: Date/Total Investments/% of Total/Number of Deals

Q1 1999 $6060M 1.41% 912 Q2 1999 $10375M 2.41% 1308 Q3 1999 $12536M 2.92% 1419 Q4 1999 $22311M 5.19% 1865 Q1 2000 $27345M 6.36% 2134 Q2 2000 $26834M 6.24% 2105 Q3 2000 $25251M 5.87% 1927 Q4 2000 $21043M 4.90% 1747 Q1 2001 $12310M 2.86% 1284 Q2 2001 $10740M 2.50% 1221 Q3 2001 $7888M 1.83% 1009 Q4 2001 $7679M 1.79% 990 Q1 2002 $6465M 1.50% 845 Q2 2002 $5859M 1.36% 856 Q3 2002 $4351M 1.01% 696 Q4 2002 $4302M 1.00% 728 Q1 2003 $4133M 0.96% 708 Q2 2003 $4774M 1.11% 743 Q3 2003 $4717M 1.10% 724 Q4 2003 $5476M 1.27% 792 Q1 2004 $5231M 1.22% 731 Q2 2004 $6103M 1.42% 865 Q3 2004 $4813M 1.12% 699 Q4 2004 $5821M 1.35% 853 Q1 2005 $5048M 1.17% 737 Q2 2005 $6278M 1.46% 839 Q3 2005 $5866M 1.36% 802 Q4 2005 $5775M 1.34% 830 Q1 2006 $6313M 1.47% 881 Q2 2006 $7118M 1.66% 980 Q3 2006 $6578M 1.53% 920 Q4 2006 $6307M 1.47% 965 Q1 2007 $7405M 1.72% 875 Q2 2007 $7321M 1.70% 1063 Q3 2007 $7749M 1.80% 1011 Q4 2007 $8043M 1.87% 1078 Q1 2008 $7685M 1.79% 1016 Q2 2008 $7384M 1.72% 1064 Q3 2008 $7071M 1.64% 995 Q4 2008 $5853M 1.36% 910 Q1 2009 $3394M 0.79% 632 Q2 2009 $4166M 0.97% 680 Q3 2009 $5101M 1.19% 689 Q4 2009 $5019M 1.17% 794

This entry was posted on Tuesday, March 9th, 2010 at 1:07 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.