Layoffs At Pre-Recession Level; Job Openings Down 30%

By SCOTT STODDARD
INVESTOR'S BUSINESS DAILY

Twenty months after the worst recession in decades, job creation remains anemic, weighing on economic growth and making it even harder for the long-term jobless to find work.

Don't blame layoffs. They spiked in 2009 but have returned to pre-slump levels, according to Labor Department data. But job openings remain 30% below their level when the downturn hit in December 2007. Gross hiring is down by 843,000 jobs.

While the economy has grown modestly in recent quarters, hiring remains depressed due to uncertainty about future demand, concerns about government policies and efficiency gains that have let companies do more with less.

"It's the drop in job openings, not the increase in job losses that is responsible for so much of the increase in unemployment," said James Sherk, a labor policy analyst at the Heritage Foundation.

Labor is expected to report Friday that the U.S. added a net 183,000 jobs in February, the most since last May. The jobless rate is seen ticking up 0.1 point to 9.1% as more people entered the labor force. Many of those new or returning job-seekers will likely find only disappointment.

December job openings fell by 139,000 to 3.06 million, the third straight decline, according to Labor's Job Openings and Labor Turnover Survey. January's JOLTS survey is due March 11.

There were 4.7 job-seekers for each opening in December, off a peak of 6.3 in July 2009 but still far above the 1.15 ratio typical before the recession, according to the Economic Policy Institute.

"We are still very near the bottom of a very huge crater," said Heidi Shierholz, an EPI labor economist.

The U.S. has expanded for six quarters, but growth has been modest by historical standards. Strong head winds remain, from a still-moribund housing market to $100 oil and looming fiscal tightening at all levels of government.

Uncertainty about ObamaCare costs have also made firms cautious about hiring, analysts said.

Never Coming Back?

"The job market is doing better, but it's not getting better fast enough to soak up those who are unemployed and particularly those who have been unemployed for a long time," said Jeff Joerres, CEO of Manpower.

Average time out of work has hit a record 36.9 weeks from 16.6 weeks at the recession's start.

Many lost factory and construction jobs will never return, leaving those workers ill-equipped for jobs in faster-growing industries such as health care, information technology and software.

"What was happening last year was the job openings part of the (JOLTS) jobs index was increasing more quickly than the actual hiring," said Sophia Koropeckyj, a labor economist at Moody's Economy.com. "That suggests there may be a skill mismatch."

As a result, unemployment will likely fall only slowly and remain above the 4.5%-5% levels typical before the recession.

A long span of unemployment often has traumatic consequences for workers and their families, not just in lost wealth but in poorer job prospects as skills atrophy.

"Getting laid off in normal times can be bad enough, but in times like this it can be catastrophic and there can be a permanent hit to earnings," Shierholz said.

With so few openings, some employers are refusing to consider hiring the unemployed as an easy way to pare potential candidates.

Anemic hiring also keeps those with jobs from seeking better opportunities. Voluntary job exits are off 30% from the recession's start, the same as job openings.

There is "less dynamism," says Koropeckyj, in an economy that historically has thrived on creative destruction.

Analysts expect hiring to pick up this year as the economy slowly gathers steam. But Sherk says the U.S. won't recover the 8.66 million jobs lost until 2016.

"It's a tough and painful job market out there," he said.

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