StagNation Means Challenges and Uncertainty For Employers & Employees

By Cash Nickerson

If you were to ask me what the most damaging impact on employers is today, I would say uncertainty.

At first it was the recession, then it was awaiting the decision of the Supreme Court on Affordable Health Care, then it was the election and now it is the “Fiscal Cliff.”

I always smile when I hear the President tell businesses to start hiring. It leads me to believe that he doesn’t have a clue about economics or how business works. Does he really think it is just a desire?

Hiring isn’t the result of tax cuts, so in the recent election, I couldn’t get excited about the Republican approach either. Hiring is about sales growth — that is where the money comes from to pay for the new employee.

Uncertainty leads to StagNation

What can stimulate sales is credit. And the Fed has been working to make money free.

But free money is not available money. With credit being rationed on an unprecedented basis, employers, regardless of size, have found themselves unable to get capital. Whether to expand, relocate, invest in new projects or new employees, employers continue to be hog-tied without access to funding sources, which would enable much needed growth in sales.

Lacking funding to move their companies forward, many employers are simply maintaining the status quo — treading water, as it were — waiting to see if and when things will sort themselves out.

This level of uncertainty, this lack of access to the tools of growth can only lead to StagNation, purloining industry’s ability to sustain itself; it’s preventing growth, and without growth there will be no hiring.

Today’s employers face unprecedented levels of uncertainty. Let’s face it, running a business has never been an easy task, but today’s challenges are even more unique as the majority of employers have found it impossible to predict what it is the future holds. This “culture of uncertainty” is an incredibly daunting and difficult situation for an employer because it leaves her wondering whether or not to hire people and expand, to hold steady, or even, to throw in the towel altogether.

In briefly looking at possible solutions to this cascade of issues — the financial crisis, which led to the real estate crisis and the job crisis — a functional government tops the list of options. Regardless of party affiliation, it’s not hard to see that each side is thoroughly entrenched in its thinking, unable to see or even bend toward the other side’s view.

No matter who leads our country — be they Democrat or Republican — this level of uncertainty will undoubtedly continue to exist because of this ideological entrenchment. For American employers, especially small- and middle-market companies, it’s most likely the first time that these events have combined to cause so much uncertainty in terms of hiring in the U.S.

Challenges for employees – A changing landscape

Today’s employees, especially older ones, face bigger challenges than ever before. Unemployed workers ranging from those just out of school to seasoned employees in their 50s and 60s seem to have it the hardest, with some being offered internships rather than jobs to see if and where they fit into an organization. Regardless of age, many people’s unemployment benefits have been extended far beyond the 99-week limit due to a continued lack of employment.

And a new but distinct kind of discrimination against the unemployed seems to be taking hold. In fact, I am increasingly seeing job advertisements that say, “Must be currently employed” become more prevalent as time goes by, making it even more difficult for the currently unemployed to make the leap back to gainful employment.

The new protected class is not about race or gender or religion — it is employment status.

If you’re one of the many unemployed in this country, you are indeed facing tough challenges. At one end of the age spectrum, this problem affects the young — those graduating from high school and looking for a trade, and those graduating from college seeking a career — while at the other end, it is affecting those over 50-years-old. As we will see, this should not have been a surprise — these are the Boomers and Echo Boomers.

Rampant unemployment has left employees with little to no bargaining power. Losing a job in today’s uncertain economic climate is a daunting prospect.

Subsequently, employees have become less likely to complain or make themselves conspicuous. In fact, in some industries, worker’s compensation claims have dropped dramatically because employees are fearful of being terminated for making a claim.

Traditionally, employees who are afraid to make waves are also employees who are less likely to volunteer an idea or champion a new project. This example of “flying under the corporate radar” can stifle innovation and fosters an environment in which employees stay in their cubicles and do only the work assigned to them for fear of retribution.

It is exactly this type of situation that can result in a culture of “learned-helplessness” where employees feel they’ve lost bargaining power, opportunities are non-existent, and upward mobility is ultimately stymied.

The image of employees hunkered down in their cubicles or work spaces, not making waves, not contributing and indeed not moving — this is a physical reflection of StagNation.