American Staffing Association - Staffing Success Special Issue

Federal Government Should Agree on 10-Year Plan to Deal With Deficit Any such plan will require higher taxes and cuts in spending. —Martin Neil Baily, senior fellow at the Brookings Institution Continued from page 21

rate will ease to 8.4% by June and 8.1% by December 2012.25

Two-thirds of the 53 surveyed economists blamed weak hiring on lack of demand.

An economist at the Federal Reserve Bank of New York, Jonathan McCarthy, uncovered a pronounced weakness in personal discretionary consumption expenditures for services, such as recreation, transportation, food services (including restaurants), and household utilities. These discretionary expenditures account for about 30% of total personal consumption, which altogether make up about 70% of GDP. McCarthy found that discretionary services expenditures have fallen nearly 8.5%, more than three times as much as the previous three recessions, and they have yet to rebound (see Figure 7). 26

In short, reduced consumer spending on discretionary services tells much of the story of the recession—and of the overall sluggish recovery, he said.

Households wary about their employment will be cautious about increasing their discretionary spending.

Repeal Complex and Expensive
Government Legislation

Repeal both the health care act and the Dodd–Frank Wall Street Reform and Consumer Protection Act, which have made it difficult for businesses to anticipate their future costs.

—Peter J. Wallison, fellow in financial market studies at the American Enterprise Institute

Create Jobs by Aiming for
Higher Inflation

Federal Reserve’s Open Market Committee should announce a plan to target inflation at 3% or 4%. This would reduce real interest rates, mitigating the problem of the zero lower bound on nominal rates. It would also increase the cost of hoarding cash, which would encourage wealthy individuals and cash-rich firms to purchase real goods and services, or else invest in productive assets. And since mortgage debt is denominated in nominal terms, a faster rate of inflation would speed the deleveraging process and let households repair their balance sheet.

—Matthew Yglesias, fellow at the Center for American Progress Action Fund

The Staffing Recovery

U.S. temporary and contract staffing employment has been growing steadily since the end of the Great Recession, according to the ASA Staffing Index27 (see Figure 2 and sidebar “Methodology of ASA Economic Surveys” on page 46).

Introduced at 100 in June 2006, the index peaked at 105 several weeks in the fourth quarter of 2007, coinciding with the prerecession peak in nonfarm employment. Then the index took its usual seasonal fall around Christmas 2007 and New Year’s Day 2008, rebounding in January 2008 to 95. It remained near that level for the first half of the year, not showing the usual rise as the year proceeded. (Staffing employment is typically lowest at the beginning of the year, increases during the year,

Per Capita Cumulative Declines in Personal Discretionary Consumption Expenditure for Services

0

Figure 7: Consumer Spending on Discretionary Services—Such as
Recreation, Transportation, Food Services, and Household Utilities—Fell
Nearly 8.5% During the Great Recession, More Than Three Times as Much as
the Previous Three Recessions.

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To Create More Jobs, Start
With the Schools

Invest in teachers. Research shows the most important factor affecting student achievement is teacher quality. Having quality teachers throughout a student’s life can change a child’s life trajectory. Rigorous teacher evaluation systems are needed. When teachers perform well, they should be rewarded with better compensation and career opportunities.