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Chicago-area economy heats way up, but jobs aren’t being created

Friday, May 30, 2014

* Wow

The Chicago Business Barometer, an index of local business activity, increased another 2.5 points to 65.5 in May after jumping 7.1 points in April. Anything over 50 indicates the economy is growing, and that’s the highest level the index has reached since October and nearly as high as it’s been for the past decade. [Emphasis added.]

According to the Federal Reserve Bank of Chicago, Illinois’ growth is actually pretty good when compared to other neighboring states.

* But it sure looks like a jobless recovery

Even though the state’s unemployment rate is coming down, Illinois still has the third worst rate in the nation. Employment was down 3.2 points to 54.6 in the Chicago Business Barometer despite a three-year high in order backlogs and increases in new orders, inventories and a spike in the price of raw materials and components.

“You can’t have employment at 54.6 if you’re going to keep up with demand,” said Alyce Andres-Frantz, Chicago Bureau Chief for Market News International and author of the Chicago Business Barometer. The increased use of temporary workers and interns “doesn’t seem to be going away.”

Only about half of the Chicago-area companies in her survey have plans to hire in the next three months, and only half of those plan to hire permanent workers. “It’s telling me companies are trying to do more with less,” she said.

Ugh.

- Posted by Rich Miller        

12 Comments
  1. - Precinct Captain - Friday, May 30, 14 @ 3:11 pm:

    We’ve heard a lot, nationally and locally, about a “jobless recovery” and this is just another confirmation that many companies have used the weak economic climate to change how they do business with regards to employees. Temporary workers are easier to get rid of, less likely to complain about poor working conditions, in a worse position to complain about poor working conditions and achieve redress, often receive no benefits, and are paid significantly less in wages. These all might seem like positives for employers, but long term it is a poor strategy because high labor turnover is bad business, even in service industries with traditionally high turnover. Even though companies are ‘winning’ with this strategy now, sooner or later the real winners will realize they are losing by pursuing this short-sighted strategy.


  2. - VanillaMan - Friday, May 30, 14 @ 3:13 pm:

    Thanks Obamacare!
    LOL!


  3. - A guy... - Friday, May 30, 14 @ 3:25 pm:

    It’s hard to diminish a region with the economic advantages of this one, but heaven’s knows our state government is trying! Unpredictability is a job killer. No place is more unpredictable than this one. It’s daunting what the business model to do business in Illinois is beginning to look like.


  4. - wordslinger - Friday, May 30, 14 @ 3:30 pm:

    Before the crash, so much employment was driven by commercial and residential construction.

    In my stomping grounds downtown, the condo, office tower and hotel construction was crazy.

    Cranes everywhere in the Greater Loop — south, west and north. The difference in the skyline from 15 years ago is amazing.

    Ironworkers, electricians, carpenters, etc., everywhere at lunch and the taverns after work.

    That went on for a lot of years, and it certainly is not back, although more hotels are going up.


  5. - Darienite - Friday, May 30, 14 @ 3:31 pm:

    The employment status is indicative of the investment market. While most are exposed to stocks, there is still a substantial amount in bonds, and cash. Either they feel the market is overpriced, or they waiting for the election at both the federal and state levels.


  6. - Former Downstater - Friday, May 30, 14 @ 3:43 pm:

    Precinct Captain hits it on the head. This report is another indication of the inequality that will significantly hurt the economy in the longterm. We can’t build a sustaining, robust economy on temporary workers and interns.


  7. - Steve - Friday, May 30, 14 @ 3:46 pm:

    I think this is a big story but most Chicago voters don’t care. I doubt this story will influence any Democrat Aldermen to ask how things can be improved.


  8. - Formerly Known As... - Friday, May 30, 14 @ 3:58 pm:

    @Precinct Captain notes an important shift in the way many of these companies are doing business.

    How many of those companies received “corporate welfare” from Illinois with taxpayer dollars? Maybe we can finally put an end to that practice.


  9. - Former Downstater - Friday, May 30, 14 @ 4:06 pm:

    @Formerly Known As… There are all kinds of corporate welfare, including tax breaks at the federal level. In many ways, we’re subsidizing the elimination of the middle class by virtue of the tax code.


  10. - Federalist - Friday, May 30, 14 @ 5:23 pm:

    And yet we keeping importing over 1,000,000 legal immigrants each into this country.

    Of course, want the political elites of both political parties is what WE get.


  11. - Newsclown - Friday, May 30, 14 @ 6:19 pm:

    I think the past ten years has seen a hard shift in the employer-empoyee landscape. Because the regulatory environment didn’t stop it, and the nature of capitalism is to push the limits of what’s allowed, we’ve seen a huge shift in how jobs are created. What used to be a decent supply of livable wage middle-class jobs have been replaced with one job, shared across a number of workers working at each position, at less than full-time hours, and at minimum wage. The work is the same, but it’s more advantageous to the business to convert it from full time to part-time work without benefits or a chance for workers to organize.

    The real fix would be a major re-set in nationwide jobs policy, and I don’t see that happening. The best available patch on this hole, short of regulation, is the minimum wage hike, applied as evenly across the board as possible.

    If we can make it less profitable to water-down the jobs across minimum wage earners, we can help build up livable wage jobs again. Right now, there is no incentive for corporations to change what they do, so you’ll see more higher-paid people at the very top, and shareholders getting bigger dividends, with little or no increased hiring for full-timers. Minimum wage used to be for “starter” jobs just for kids on summer break, but the new paradigm in corporate hiring is to apply the part time starter wage to the full-time work, and pocket the savings as “shareholder value”.


  12. - VanillaMan - Saturday, May 31, 14 @ 9:17 am:

    It is too expensive to fill new jobs based on a number of changing factors within each business. Each businessperson makes an individual choice on these matters. If you want to lump everything together into an average, you must remember that lumping everything into an average can mean very little, and addressing solutions to that average may also result in meaning very little.

    If you look for a trend in an average like this, then you may find one. But that often means very little as well.

    I believe it is safe to conclude however, that broad government approaches to job growth appear to be useless.


Sorry, comments for this post are now closed.


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