Are U.S. Companies Using Elections as Scapegoats for Hiring Plans?

Politicians, pundits and job market experts alike frequently cite “uncertainty” as a root cause for weak hiring.

Yes, employers are uncertain about the U.S. economy. They’re also skittish about future tax policy, government spending, oil prices, the Middle East, China’s reduced rate of growth and just about any other aspect of domestic and global affairs that can affect their business. The upcoming presidential election just adds to the anxiety.

In the coming weeks, you’ll probably hear a lot of employers say they’re “waiting to see what happens after the election” before they solidify any hiring—or downsizing—plans.

I don’t think you should buy the rhetoric, and here’s why. While it’s valid for any business owner to be concerned about the political environment, trends in tax policy or government spending, their real problems are still connected to demand, or lack thereof, for their products.

Consider that the headline on a February 2012 Gallup survey report blames health costs and government regulations for curbing hiring among small businesses. The chart included in the report tells a different story. The top reason that 76 percent of surveyed companies gave for not hiring was that they “don’t need any additional employees at this time.”

Another 71 percent said that they were “worried revenues or sales won’t justify adding employees.”

Likewise, the September 2012 National Federation of Independent Business’s (NFIB) Small Business Economic Trends report notes that 22 percent of businesses view the current period as a “bad time to expand” due to “political uncertainty.” That’s a record high for the business cycle, according to NFIB.

A closer review of NFIB’s data, however, shows that a much higher number (38 percent) of respondents said it wasn’t a good time to expand because of “economic conditions.”

Despite all this uncertainty, there have been a few shreds of good news lately, and maybe they’ll give employers cause to expand their payrolls.

For example, the Conference Board’s Consumer Confidence Index rose in September 2012 to its highest level since February. More consumers said they expected business conditions to improve over the next six months, and they had a more favorable outlook for the labor market, according to the September report.

Another positive sign: All major components of household spending rose in 2011, according to the U.S. Bureau of Labor Statistics (BLS). Average annual expenditures per consumer unit, which includes families, single persons living alone and people living together who share expenses, rose 3.3 percent in 2011, compared with a 2 percent decline in 2010, reports BLS.

Some of this increased confidence and spending power may translate into job opportunities in the near future, political uncertainty aside. For example, staffing services company ManpowerGroup reports that its 2012 fourth quarter employment outlook for the U.S. is the strongest it’s been in five years for the October-December time period. One of Manpower’s top executives reminds us that employers have had plenty of other things to worry about while managing their payrolls.

“Despite the tumultuous global economy, election uncertainty, record heat waves, healthcare reform and other challenges, employers indicate that steady, but cautious, hiring progress will continue through the end of the year,” said Jonas Prising, ManpowerGroup president of the Americas, in a statement about the quarterly outlook results.

We certainly hope so.