By hiring, and giving raises, employers can help America

January 15, 2003|By JAY HANCOCK

WE'RE ALL doing our part for the economy, aren't we?

President Bush is ready to cut taxes again and is crafting something that resembles an economic policy. Congress has opened the spending spigots as if it's the 1980s, and the Federal Reserve has set interest rates as if it's the 1950s.

Banks seem to be making loans. Stock investors have hung in there like George Washington at Valley Forge.

And consumers have heeded Bush's call to keep the world working. In the face of terror, war and fraud, the country set another retail-spending record last year. Of course, asking Americans to shop is like asking bulldogs to look ugly, but it's a critical factor you don't want to take for granted.

And employers - what about the employers?

They've announced more than 1.4 million job cuts in the past year, says outplacement firm Challenger, Gray & Christmas.

Most months they've been firing more people than they've been hiring. They had fewer people on the payroll in December than in January 2000, according to the Labor Department. And the raises they've been handing out, while improving, are nothing to call the Carnival Cruise people about.

What about the employers?

They're slacking off, and they seem to have escaped the moral marching orders aimed at other economic agents. There is no scarcity of macroeconomic advice for the Fed: Lower rates!; for banks: Lend money!; for Congress: Spend, spend, spend!; or for consumers: What? No TV in the mud room?

But corporations and their personnel departments, which possess economic tools more powerful than a fully financed, zero-percent Chevy Tahoe, have gotten a free ride from politicos and media hacks.

It was not always thus. As the Depression set in during the early 1930s, President Herbert C. Hoover publicly urged companies not to cut wages. (He also asked unions not to demand raises.)

To fight inflation in the 1960s and 1970s, four U.S. presidents called on industry to observe voluntary price guidelines. President Jimmy Carter suggested that only "irresponsible" corporations would ignore his plea to shrink annual price increases by half a percentage point.

In the 1990s President Bill Clinton urged employers to hire people off the welfare rolls.

Bush, for his part, has asked business to encourage physical fitness and charitable giving. And he urged companies to give workers time off for 9/11 memorials.

Maybe he should ask them to stoke the payroll.

"My fellow Americans," he could say in the State of the Union speech, "I understand that corporate profits are important to the recovery and that higher personnel costs can hurt profits. But the main thing this economy needs is consumer confidence, and confidence fell off the truck last fall and hasn't caught up.

"The best way to get it back is for corporate America to give raises to productive employees and offer work to job seekers if there is work to be done. I'm not asking companies to open a welfare office. I am asking them to look at their 2003 budgets and, if there is reasonable expectation of incremental profit from incremental hiring, to add positions.

"I understand this is an unusual request from your president. But we live in unusual times. The world is caught in a doldrums of weak pay and flat prices the likes of which we haven't seen since the 1930s. The usual remedies - lower interest rates and higher government spending - have had little effect.

"American households face the same financial issues of income, expenses and debt that companies do, and households have done their part to stimulate the economy. Now it's your turn, corporations."

Of course this won't happen, partly because hurling exhortations at big business hasn't proved a political winner. Look where it got Herbert Hoover and Jimmy Carter.

But fatter payrolls would indeed help the economy, and corporations are in a position to deliver. Business need not be hurt by hires and raises, and it might even be pleasantly surprised. This could be one of those homeopathic paradoxes, not unusual in economics, in which a bit of poison produces a lot of virtue.

Higher worker costs would threaten the bottom line, true. But theyt would also promote worker good will, and they might stimulate the economy out of its slump. And that would fuel corporate profits a heck of a lot more than payroll penny pinching.

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