Middle market hiring gains momentum: Next stop, economic growth

In the nearly five years since the Great Recession ended, U.S. employment has been gradually increasing. From a high of 10 percent in October 2009 to a post-recession low of 6.6 percent in January, more Americans are back at work. Yet long-term unemployment and underemployment remain a vexing issue, as 11 million workers fell into those categories in February, according to the U.S. Bureau of Labor Statistics.

Solving this issue is critical for U.S. economic health and growth, as the economy relies on both consumer and business spending to grow. When consumers are employed to their capacity and feel secure in their employment, they are more likely to spend. Business confidence can similarly be seen in increased employment and capital expenditures.

The middle market, which employs more than 45 million people and expects to add 1.2 million jobs this year, is an engine of economic growth that is expected to continue to drive down the unemployment rate.

Current employment picture

The long-term unemployed are workers who have been unemployed for more than six months. The underemployed are those who would like to work full time, but have been unable to find full-time jobs. While the official unemployment rate inched up a bit in February to 6.7 percent, the broadest measure of unemployment, which includes the underemployed, stands at 12.6 percent.

Increasingly, education is an important factor in employment, wages and career attainment, according to the Pew Research Center. This is especially the case for the Millennial generation, those born after 1980, who make up a disproportionately large share of the long-term unemployed. In particular, the wage gap between college graduates and high school graduates with full-time employment is wider for Millennials than for previous generations.

The middle market’s response

With the economy improving, middle market executives expect hiring to increase. CIT’s survey of middle market executives, published in October, notes that current economic conditions and the quality of the applicant pool are the two biggest obstacles to hiring. With nearly half of executives stating that employment at their companies will increase, a brightening economic picture may very well further increase middle market employment this year.

Hiring and retaining high-quality, talented employees is another concern for executives. Nearly half of those surveyed noted that retaining their most talented employees is an issue.

Long-term unemployment has become a focus for the White House, which recently unveiled a $150 million, public-private initiative to support work-based training, engage with employers to create job programs, and disseminate best practices for recruiting the long-term unemployed.

By involving more middle market companies in this and other, similar efforts, more of the long-term unemployed are likely to receive training, get recruited and ultimately re-enter the workforce. Middle market companies that adopt these practices and seek out these partnerships will benefit as well.

A final word

Efforts to train and recruit the long-term unemployed and underemployed are likely to pay off both for middle market companies and the U.S. economy at large. When more of those workers are employed, the economy is likely to continue to grow for a longer period of time, creating prosperity for all.

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