Three mildly encouraging signs on employment
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It made for some nice headlines when the U.S. economy added 308,000 jobs in March, but the long-term growth of the job market is likely to hinge on three factors: venture capital, small businesses and optimism. It isn’t time to declare victory over the long-departed recession, but at least there are mildly encouraging signs in all three areas:

— Venture capital funding has gone up by more than 5 percent in recent months, says Stephen Levy, director of the Center for Continuing Study of the California Economy. Before that, the funding had done even worse than the Nasdaq, dropping 80 percent, both in California and nationwide, since the dot-com boom.

“We have hit bottom, and we’re bouncing back up,” Levy said, “but it’s nothing to write home about yet.”

Why venture capital is important to so many workers: As venture capital increases, startups challenge existing businesses. The startups need to hire workers, of course, but they also exert competitive pressure, often causing existing businesses to increase staffing. The competition also means that top employees are in more demand, which often leads to pay raises and retention bonuses.

“The new jobs have to come from new companies,” Levy said, “and that has to come from venture capital.”

— In its first-quarter survey of 3,000 job-seeking managers and executives, international outplacement firm Challenger, Gray & Christmas found that 63.5 percent of the respondents who found jobs got them at businesses with fewer than 500 employees. That’s the highest level since 2001.

The firm’s survey also found that 10.1 percent of the job seekers ended up starting their own businesses in the first quarter — the highest rate since the third quarter of 2000.

Challenger also pointed to results of a March survey by the National Federation of Independent Businesses, which found that 13 percent of the firms it surveyed plan to increase employment by July. Although that rate might not sound impressive, it’s comparable to what happened during the country’s major job expansion of the 1980s.

Although certainly offshoring and automation are wiping out jobs, another significant part of the employment problem in the past couple of years has been that employees and the unemployed have been clinging to the notion that large employers are the best source of job security. Sometimes that’s true, certainly, but often risk-takers get rewarded as the economy emerges from a recession.

Another thing that many frustrated job hunters don’t understand is that startups and small businesses are what drive the economy, but those are not the companies you hear about if all you do is scan want ads and read industry publications. You hear about and get those jobs through networking, as contacts tell you about ambitious stars who are going out on their own — not from e-mailing your resume to human resources executives at big companies.

— Surveys show that executive recruiters and chief financial officers are at least somewhat optimistic about the hiring outlook. In a bizarre way, even the fact that the U.S. unemployment rate went up slightly to 5.7 percent last month is a sign of optimism. It means more unemployed people were actively looking for jobs instead of giving up because they were so exasperated.

As I’ve warned before, though, the unemployment rate is not a very trustworthy economic indicator. People who have given up their job hunt or have exhausted their unemployment benefits aren’t counted, and the statistic also doesn’t include how many people are doing piecemeal work just to get by.

In the March quarterly CFO Outlook Survey, conducted by Financial Executives International and Duke University’s Fuqua School of Business, nearly three-fourths of the 216 chief financial officers surveyed plan to increase their number of employees within the next year. Meanwhile, only 7 percent expect to cut back. Overall, the number of employees is projected to rise 5 percent.

In a nationwide survey of more than 200 executive recruiters by the executive job search firm Netshare, about 85 percent expect a “major swing in hiring” within nine months. Most are expecting it to happen in the summer or fall, though, rather than right away.