Economy

By Kevin Smith, San Gabriel Valley Tribune
Posted: 09/08/14, 6:31 PM PDT | Updated: 1 min ago

Looking for full-time work?

Good luck, because a new survey from Harvard Business School reveals that U.S. business leaders are reluctant to hire full-time employees and would rather invest in technology, outsource work to third parties or hire part-time workers.

The survey of Harvard Business School alumni, “An Economy Doing Half its Job,” also notes that while many mid-sized and large companies have rebounded from the recession, working-class Americans and small businesses are struggling.

Forty-six percent of those surveyed strongly agreed or somewhat agreed that their companies’ U.S. operations prefer to invest in technology to perform work, rather than hire or retain employees. Only 25 percent disagreed. The remainder were neutral or unsure.

The survey also showed that nearly 50 percent of the leaders surveyed prefer to rely on vendors for work that can be outsourced, while only 29 percent would rather hire more workers.

“That doesn’t surprise me,” said Bob Machuca, a regional manager with the Los Angeles County Economic Development Corp. and the San Gabriel Valley Economic Partnership. “We’re seeing this more and more. Businesses are using technology and new software to achieve as much as a 30 percent increase in productivity.”

Machuca works to attract and retain business in the region. But he’s seeing an increased reliance on advanced technology and automation. That typically equates to fewer workers, and there are other factors also figure into the mix.

“Manufacturing companies that invest in new equipment can qualify for a partial sales tax reduction of 4.2 percent,” he said. “And there is another advanced manufacturing exemption. If you are an advanced manufacturer, like a pharmaceutical company or an aerospace business, and you buy new equipment you can qualify for a full sales tax exemption.”

Machuca said other industries like food processing might also be able to qualify for the full sales tax exemption if they invest in high-tech equipment.

“Businesses are getting smarter and there are lots of programs out there,” he said. “The sad part is that a lot of these programs don’t create jobs.”

Survey respondents were relatively bullish on the future of U.S. businesses, with 31 percent expecting them to be better able to compete in global markets over the next three years and 26 percent expecting them to be less able.

But workers who are hoping for a raise may be out of luck.

Forty-one percent of those surveyed expect lower wages and benefits over the next three years, while only 27 percent predict increases.

Friday’s August jobs report from the Labor Department confirmed that average hourly pay has crept up only about 2 percent a year since the recession ended five years ago — barely above inflation and far below the gains in most recoveries.

“This is the primary economic and policy puzzle facing policymakers right now: Why have wages remained so low in the face of an improving economy?” said Joe Brusuelas, chief economist at McGladrey, a tax and accounting firm.

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