US News & World Report September 10 2010 05:25:58 PM
Economists call it an inflection point. Out in the real world, it doesn’t feel like much, but it has to happen before things get better. And it might be happening now.
As everybody in America knows, we’ve got a scary jobless problem. The unemployment rate is 9.6 percent and might cross 10 percent again before it starts to go down. Weak hiring is the single biggest problem in the economy, dragging out the housing bust, depressing spending, and even threatening to trigger a second bout of recession. Nobody’s sure how to boost hiring, and the Democrats seem likely to suffer big losses in the November midterms due to the lousy job market and all the other woes it’s causing.
Things might finally be getting better, however. Not as quickly as anybody would like, and certainly not fast enough to give Democrats convincing evidence of a turnaround by November. But here are a few signs that jobs are slowly coming back:
No more big layoffs. In 2008 and 2009, companies laid off thousands of workers at a time. Some of the eye-popping axings: 59,000 at Citigroup, 47,000 at General Motors, 12,000 at Starbucks. Even the model corporation, Warren Buffet’s Berkshire Hathaway, laid off 17,000 people in 2009.
Those days, thankfully, seem to be over. Outplacement firm Challenger, Gray and Christmas, which monitors layoffs, says that in the most recent month, employers announced just 34,768 layoffs, the lowest tally in 10 years. If the number seems big, consider that near the low point of the recession, in January 2009, companies announced 242,000 layoffs-seven times more than the latest toll. And even with layoffs, companies are hiring to fill other positions. The overall trend suggests that companies have cut just about everybody they can, which means that those who are left probably have much better job security than they did a year ago.
All major sectors are hiring. Job-search firm Indeed.com says that in all 12 industries it monitors, hiring has risen significantly from a year ago. Job postings in transportation are up 119 percent from 2009, for example. In manufacturing they’re up 67 percent, and in retail, 55 percent. The surprising laggard is the healthcare industry, where job postings are only up 17 percent. But that’s probably because healthcare, which is somewhat recession-proof, never had the mass layoffs that other industries did. The spikes in hiring don’t necessarily mean that every industry is adding jobs on net, because companies hiring in one area or specialty may still be weeding out workers elsewhere. What it means is that companies are hiring to fill specific needs, usually a precursor to more robust hiring.
Some workers are hard to find. In a recent survey by recruiting firm Manpower, 14 percent of U.S. companies said they struggle to find people with specialized skills like welders, electricians, carpenters, sales reps, and nurses. The need for such workers is greater in other countries, but any shortage of workers at all is a welcome counterpoint to the oversupply of office assistants, manufacturing and construction workers, unskilled laborers, and many others who add up to nearly 15 million unemployed Americans. Over time, some people who can’t find jobs in their old fields will get training in specialties where there’s more demand, which will help rebalance the labor supply. Beyond that, research by consulting firms like Accenture and McKinsey shows that many firms feel they lack highly skilled workers in sales, customer service, and other areas. That indicates opportunities for people willing to get extra training and develop multiple skill sets to differentiate themselves from the herd of job seekers.
The private sector is adding jobs. Private-sector hiring has increased every month this year, a gradual but positive trend that indicates the most important part of the economy is healing. There have still been net job losses in the economy as a whole, due to layoffs in government and the nonprofit sector, which could continue for a while. And not all industries are adding jobs overall. Still, private-sector hiring has to proceed in baby steps before the pace picks up. And it’s the private sector that will ultimately bounce the economy out of stagnation.
The pace of improvement is still going to be painfully slow. Private-sector hiring remains well below the rate needed to put the unemployed back to work, which means the unemployment rate will probably head up before it starts to decline for good. The economy changes faster than ever these days, and many Americans have outdated skills that will keep them out of the game. That could produce a degree of chronic unemployment that severely taxes the nation’s social safety net. And companies will remain reluctant to hire in bigger numbers until spending picks up, which could take months or years. Moody’s Economy.com predicts that employment won’t return to pre-recession levels until 2013. Some think it will take longer.
What seems to be happening now is a gradual break in the gloom. The sun won’t necessarily start shining tomorrow or the next day, but odds are good that the storm is over. Sooner or later the horizon will look brighter.