Jobless Masses a Boon for Employers

Companies can hire better workers, pay less
By Kevin Spak,  Newser Staff
Posted Jun 28, 2010 3:00 PM CDT
Hundreds of job seekers gather at the Los Angeles Mission for the ninth annual Skid Row Career Fair, Thursday, June 3, 2010, in Los Angeles.   (AP Photo/Adam Lau)

(Newser) – High unemployment isn’t bad for everyone. Many companies are taking advantage of the jobless masses, hiring extremely motivated workers at discount rates, Bloomberg reports. “Companies are getting higher-productivity employees for the same or lower wage rate they were paying a marginal employee,” explains one investment strategist. “You have a more productive and more adaptive work force.” That's boosted profits and contributed to big stock gains.

Some firms are using the opportunity to “slice off the weakest members of the team,” adds one exec, since high-quality replacements are everywhere. Maybe that's why, despite all the hiring, unemployment remains high. A record 46% of unemployed people have been out of work for 27 weeks or longer. “There is a structural dimension to unemployment that looks persistent,” says one economist. “It feeds on itself,” because long stretches of unemployment make landing a job harder.

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