Improving economy produces less risk-taking

The economy is improving, but few unemployed managers and executives are willing to start their own firms or relocate to take a new job, says the lastest job market analysis by global outplacement consultancy Challenger, Gray & Christmas.

 In fact, the firm says it is precisely because the economy is getting better than so few job seekers are willing to risk starting their own businesses.

This seems a bit counterintuitive. I would think the improving economy would be a good time for job seekers to take a chance. But Challenger CEO John Challenger offers this explanation:

“Starting a business is a risky endeavor, even in the best economy. It has been particularly difficult in this recession-recovery cycle because of more stringent lending practices. Loans are still not easy to secure, so as the employment picture brightens, more job seekers are abandoning entrepreneurial aspirations for the stability of a full-time position,” Challenger said in a press release.

According to Challenger’s latest Job Market Index, 4.7 percent of unemployed managers and execs started their own companies last year, down from 8.6 percent in 2009 and the weakest start-up activity since Challenger, Grey started tracking the number in 1986.

As for the percentage of job seekers moving to take a new job, that also was a record low in 2010 — 7.6 percent, down from 13.3 percent in 2009, the firm reported.

Challenger, Grey attributes a weak housing market for the reluctance to move.

“Job seekers who own a home — even if they are open to relocating for a new job — are basically stuck where they are if they are unable or unwilling to sell their homes without incurring a significant loss,” Challenger says.

This I can understand. Taking a new job while trying to sell your house in your old location is a royal pain. I once took a job in California, while trying to sell my house in Kentucky. The house was on the market for several months. While waiting to make the right deal, I had temporary living quarters in California. The rent was right — free — but there was a three-hour commute across Orange and Los Angeles counties. I don’t recommend the drive. 

Check out the complete Challenger, Grey report: Job Market Improving Just Enough To Deter Risk-Taking Endeavors