Rather than attributing the poor job market to banks (NYSE:KBE) or the government, we should be mindful of the fact that private sector companies simply aren’t producing the quantity of jobs they used too.
In a recent article, Thomas Friedman contrasts the current most valuable companies with those from fifty years prior. The differences are staggering. Nobody in today’s economy can raise a candle to the employment behemoths of the 1960’s. Our fastest growing internet/social companies — Facebook, Twitter, Groupon, Zynga and LinkedIn (NYSE:LNKD) — collectively have fewer than 20,000 employees. Even our biggest employers like IBM (NYSE:IBM) barely have half the employees that AT&T (NYSE:T) and GM (NYSE:GM) had several decades ago. The decline of the telecommunications industry and manufacturing accompanied the rise of corporations able to make more money with fewer workers.
Given the desirability of labor efficiencies to increase profit margins, don’t expect the number of jobs created annually by the biggest companies to increase anytime soon. Government can adjust spending and taxation, but current employment woes may just be attributable to the fact that we are confronted with a very different private sector.