GDP growth is soaring. Interest rates are at record lows. The government is pulling out all the stops on fiscal and monetary stimulus. Markets are active and orders are up. To most, these are the signs of a bona fide economic boom. Still, one critical element is missing: jobs. Though we've seen some job growth in recent months, job creation rates are well below those forecasted by economists. In this article, we look at factors contributing to slow job growth. We examine overseas outsourcing as well as corporate America's changing appetite for hiring.

Lately, job creation has been mixed to say the least. According to the Bureau of Labor Statistics, the economy created 308,000 new jobs in March 2004, but a mere 21,000 new jobs in February 2004. In order to fulfill the economic goals outlined by the President, the US economy needs to add at least 300,000 new jobs a month to reach full recovery by the end of the year. A recent slew of corporate surveys show that though the nation's business leaders are optimistic about the economy's prospects, they're hesitant to ink job orders. According to a recent report by The Wall Street Journal, companies are loath to hire "on speculation" alone. Prudence and caution are governing budgets, slowing job creation.

Corporate America's current reluctance to hire can be attributed to one main factor: the US obsession with efficiency. Coming out of the dot-com bust, US business reacted to the downturn by getting lean. Cost cutting has basically become a mantra of corporate life. Information technology, once a maven of growth, has transformed companies into efficiency-obsessed organizations. Companies are using IT to shore-up their supply chains and cut their payrolls. Take electronic check in at the airport, for example. Every e-terminal has replaced two airline workers; and machines don't take sick days or require benefits.

The drive toward maximum productivity has also changed the corporate disposition to hire. When new orders come in, today's companies don't react by creating job orders. Their first instinct is to stretch internal resources or invest in new IT or manufacturing resources to meet that demand. When jobs do need to be added, executives look for the most productive workforce at the lowest cost. In recent years, the workforce of choice has been in Asia.

Today, companies are moving manufacturing, IT, and customer service jobs -- new and old -- abroad. Contrast the US economy to Asian economies and the situation is quite different. Asia is booming. The Chinese economy alone is growing in upwards of 9% annually. Asian nations not only have the workforce to absorb seemingly unlimited growth, but can produce output at a fraction of the cost of US manufacturing. Asian populations are not only numerous, but well educated, disciplined, and willing to work long hours. At the end of the day, it just makes good economic sense for US companies to move jobs abroad. As long as corporations can feed the bottom line by outsourcing to Asia, we are unlikely to see a reversal of this trend anytime soon.

As evidenced by the March 2003 job numbers,the strengthening economy will eventually push companies to increase domestic hiring. Asia is strong in certain sectors, but is not capable to absorbing all jobs, whether at the top or bottom of the value chain. Expect job recovery to be choppy though as corporate caution is gradually supplanted with confidence. Recruiters should continue to be patient. Current economic indicators still give the industry every reason to be optimistic.

Recruiters World Special Reports is a timely, in-depth news series that explores vital issues and trends affecting the human-capital industry. Published monthly, Recruiters World Special Reports is presented and distributed exclusively through Recruiters World in Review. Visit the Special Reports archive to read previous articles. Watch for new articles as they appear on the Recruiters World home page.