Experts pessimistic on job growth
By Adam Geller
Associated Press
NEW YORK — The economy may be growing, but U.S. workers can be forgiven for feeling glum. Where are the jobs?
Eugene Tanner • The Honolulu Advertiser
As recently as last summer, economists were predicting that layoff announcements would slow by the fall and unemployment would bottom out and start to improve.
O'ahu job seekers searched for a good fit at the Job Quest job fair held at the Neal Blaisdell Exhibition Hall Wednesday. The nation's unemployment rate remained at 6 percent in December as employers cut more than 101,000 positions. Analysts say it points to a weaker job market than expected earlier.
Instead, the nation's unemployment rate stuck at 6 percent in December, the Labor Department reported recently, as employers cut more than 101,000 positions, the sharpest decline in 10 months.
While statistical idiosyncrasies of the report may be overstating the problem, analysts say it points to a weaker job market than expected earlier, one that remains stagnant and that isn't likely to get much better in the next few months.
"We're in a very flat period of the economy, where you get economic growth driven primarily by productivity gains," said John Silvia, chief economist for Wachovia Corp.
Companies are trying to squeeze more out of existing workers, asking them to work longer and harder and perhaps grudgingly investing in new equipment. But executives have decided "whatever it is, don't add people and especially not at the turn of the year," he said.
That reluctance to hire — and the potential for more layoffs — will stretch into the the first part of the new year, Silvia and other analysts said.
In a recent survey of 800 U.S. and Canadian personnel executives, 52 percent said they anticipate layoffs at their companies this year. About 11 percent of those surveyed said they expect the cuts to affect more than one-fifth of their workers.
About a third of those polled by human resources consultant DBM said their companies will be doing some hiring, including some of the firms that simultaneously plan to cut jobs.
While those hiring plans are somewhat encouraging, companies will be moving ahead slowly, stretching out the interviewing and job-offer process, said Dale Klanfoth, regional vice president at DBM.
The sluggish job outlook reminds some analysts of a period during the early 1990s, when the economy grew but unemployment remained high in a so-called "jobless recovery."
"We are in a recovery, but it's ... torture because it's so slow and therefore there's not a lot of action that can be taken," said Jeff Joerres, chairman and CEO of Milwaukee-based Manpower Inc., the nation's largest temporary staffing company. "We normally accelerate through this phase, but we're bogging down."
Of the nearly 16,000 companies surveyed by Manpower in November, 20 percent said they plan to hire new workers in the first quarter of this year. That was a marked improvement over the same period a year ago, but only slightly better than at year's end. About 12 percent said they intend to cut back staff in the first quarter, compared with 9 percent in the previous period.
Joerres said the two months since that survey was done have likely not resulted in much of a change in the business mindset. Instead, he and others said, employers' uncertainty about a potential war with Iraq, and a faceoff with North Korea leaves them more uncertain about the economy and more reluctant to hire.
"Until it is cleared up ... businesses are not going to invest. At the same time, if they're uncertain about the future, they're not going to bring on more workers," said Joel Naroff of Naroff Economic Advisors in Holland, Pa.
Naroff and others said the recent unemployment figure may have magnified the problem. They point out that the largest number of jobs lost was in retailing. But the figure is measured against expectation of the usual heavy hiring by retailers for the holiday season, which didn't happen this year. In essence, retailers didn't hire nearly as many people, and so they won't be laying off as many in January.
Economists also point out that unemployment remains far below the 7.8 percent it hit during the last recession. Even so, fresh memories of the boom just a few years ago make the current job market look particularly poor for many workers.
"If you're looking at things with a late '90s sense of history and saying 'Wait, why can't I get back there now?' it's probably more depressing than it should be," Silvia said.
