Useful piece from the LA times about the problems facing the US labour market this time round.
On Friday, the Labor Department announced that employers added a net 126,000 payroll jobs in October. In all, the economy has added 286,000 positions over the last three months — the best showing since early 2001.
But 2.4 million more jobs would be needed to regain all the ground lost since March 2001, when the last recession began. When, or even if, those positions will come back is far from clear. Here's the problem: Many companies like the notion of a jobless recovery. The leaner they can keep their U.S. payrolls — by using overtime, automating the production process and outsourcing jobs overseas — the higher their profits. The murky hiring picture affects not only the 8.8 million unemployed but the 1.6 million who want a job but aren't actively looking for work. It affects millions more who want a full-time job but must get by with part-time work. And it weighs on the more than 130 million employed. "The greatest single concern people appear to have about the economy is jobs," investment house Fred Alger Management Inc. said in its November market review. "We have companies and an economy that can shift gears quickly, but not the kind of job creation and job security that people understandably seek."
Although the economy expanded during the third quarter at its fastest rate in 19 years, people's confidence in the future remains "middling," noted Richard Curtin, who directs the University of Michigan's monthly consumer survey. The tenuous job situation is a big reason. "It used to be understood that when business weakened, layoffs went up. When it improved, people were called back to do the same jobs at the same employers," Curtin said. "Now, if people lose their jobs, they have to find new skills and a new job at a new employer. It's a more daunting challenge." It's one that many stand to face, even as the economy picks up steam. The job placement firm of Challenger, Gray & Christmas reported that planned layoffs at U.S. firms were 171,874 in October, more than double September's total and the highest in a year.
Productivity is up just about everywhere. In the third quarter, nonfarm productivity rose 8.1%, a rate exceeded only twice in the last decade. "If you survived the last few years, you've done it by being really mean and lean," said Scott Montrey, a spokesman for the National Assn. of Manufacturers. "And once you get lean and mean, you don't go back to being fat and lazy." The trouble, economist Nick Perna said, is that "if every company was lean and mean, the economy would be in serious recession." Perna — who is credited with coining the term "jobless recovery" more than a decade ago — is hopeful that, as confidence builds and the economy expands, hiring will follow. After all, the jobless recovery of the early '90s eventually gave way to a lengthy, job-packed expansion. "In the best of all worlds, we'll get rapid productivity growth and, when people are displaced, they're able to find work in other sectors," Perna said. John Challenger, chief executive of Challenger, Gray & Christmas, the placement firm, is more bleak. "My sense is that hiring and job creation will be meager," he said. "There are huge transformative forces at work, with technology and globalization forcing us in different directions. I think we're in uncharted territory."