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Unemployment, Inc.: Six reasons why America can't create jobs

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1 The rent-a-worker economy

Laura Dahowski knows a lot about how high-tech firms manage their labor costs. When they need help, she's hired as a contract worker. When the project is over – say, rolling out some new software or video game – so is her employment.

Ms. Dahowski, based in Seattle, is part of a growing cadre of never-permanent employees. That might be a perfectly fine way to work, if the time in between jobs wasn't so long.

Her problem, writ large, may also be a significant factor behind the economy's dearth of job creation. Businesses in many industries are managing their people for maximum efficiency through techniques that range from outsourcing whole departments to relying on contract workers and on-call support. In the past, hiring people project to project was often a way to cut costs in hard times. Now it is becoming a permanent way of doing business.

The result is efficiency gains for employers. That can often be part of a "virtuous cycle" where profits go up, firms invest in new ventures, and jobs and incomes keep growing. But in a depressed economy, moves that have bolstered corporate earnings haven't fueled a recovery in jobs.

"My dad worked for the state of New Hampshire," says Dahowski. "My mother worked for years at an insurance agency. You're there and you're locked in [to wages and benefits]. That's totally not the way that it is now."

Of course, traditional steady jobs haven't vanished entirely. And the definition of "steady" has always depended on the employer's own solvency. But the shift toward more flexible workplaces has accelerated in recent years.

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