May 14, 2010 in Business

Employers likely to keep staffing low despite recovery

Cutbacks, higher productivity mean millions of jobs may be gone for good as recession ends
Christopher S. Rugaber Associated Press
 

Unemployment claims drop

WASHINGTON – New claims for unemployment benefits dipped for the fourth straight week, a sign the job market is improving at a slow but steady pace. The Labor Department said Thursday that initial claims dropped last week by 4,000 to a seasonally adjusted 444,000.

WASHINGTON – Fewer construction workers will be needed. Don’t expect as many interior designers or advertising copywriters, either. Retailers will get by with leaner staffs.

The economy is strengthening. But millions of jobs lost in the recession could be gone for good.

And unlike in past recessions, jobs in the beleaguered manufacturing sector aren’t the only ones likely lost forever. What sets the Great Recession apart is the variety of jobs that may not return.

That helps explain why economists think it will take at least five years for the economy to regain the 8.2 million jobs wiped out by the recession – longer than in any other recovery since World War II.

It means that even as the economy strengthens, more Americans could face years out of work. Already, the percentage of the labor force unemployed for six months or longer is 4.3 percent. That’s the highest rate on records dating to 1948.

Behind the trend are the cutbacks businesses made in the recession to make up for a loss of customers. To sustain earnings, they became more productive: They found ways to produce the same level of goods or services with fewer workers.

Diminished home equity and investment accounts have made shoppers more cautious, too. And their frugality could endure well into the recovery. That’s why fewer retail workers, among others, will likely be needed.

Among those whose former jobs may be gone for good are:

•Julie Weber, of Milwaukee, who designed office cubicles for nearly seven years. She lost her job about a year ago. Since then, she’s been able to find only part-time work outside her field. Interior design was hammered by the real estate downturn. “My hope for getting back into the industry is not very high,” said Weber, 29.

•Erik Proulx, 38, a former advertising copywriter in Boston, who finds more companies are turning to social media and viral marketing and are less drawn to agencies that focus on traditional TV and print ad campaigns. Proulx was laid off in October 2008 – the third time an employer had cut his position or had closed. He no longer wants to rejoin the industry.

•Louis DiFilippo, 30, who decided to study information technology after losing his job managing a gourmet food store in Washington, D.C. After six months of unemployment, he embraced a career with more stability. He now works on computer network security for the Navy.

More than one-third of chief financial officers at 620 big companies surveyed in March by Duke University and CFO magazine said they didn’t expect to restore their payrolls to pre-recession levels for at least three years. Nearly all cited higher productivity and tepid consumer spending.

“Companies have just figured out, ‘We didn’t want to fire people … but now that they’re gone, we’ve realized that we can get by without them,’ ” said John Graham, a Duke finance professor who directed the survey.

Productivity grew at an annual rate of 6.3 percent in the year ending in March, the Labor Department said this month. It was the largest increase in 48 years.

In the long run, more-productive workers raise standards of living: Companies can pay more without inflating prices. But in the short run, high productivity delays hiring.

U.S. employers did add 290,000 jobs in April. The unemployment rate rose to 9.9 percent, though, because 805,000 people without jobs poured into the labor force to seek work.

Three industries, in particular, where many jobs may not be coming back are retailing, manufacturing and advertising.

Retailers have lost 1.2 million, or 7.5 percent, of jobs that existed before the recession, according to Labor Department data. Circuit City and Linens & Things have collapsed. Starbucks closed nearly 800 U.S. stores. Robert Yerex, an economist at Kronos, a work force management company, estimates 20 percent of those jobs are never coming back.

Manufacturing has shed 2.1 million jobs, or 16 percent of its total, since the recession began. Goodyear Tire & Rubber and Boeing Co. laid off a combined 15,700 people during the recession. General Motors eliminated 65,000 through buyouts and layoffs. And as Americans buy fewer cars and homes, more than 1 million jobs in the auto, steel, furniture and other manufacturing industries won’t return, according to estimates by Moody’s Analytics.

Advertising and PR agencies have lost 65,000 jobs, or about 14 percent of the pre-recession total. Moody’s Analytics estimates those industries will lose even more within five years.

© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Get stories like this in a free daily email


Please keep it civil. Don't post comments that are obscene, defamatory, threatening, off-topic, an infringement of copyright or an invasion of privacy. Read our forum standards and community guidelines.

You must be logged in to post comments. Please log in here or click the comment box below for options.

comments powered by Disqus