Callbacks from layoffs less likely now
By Adam Geller
Associated Press
More than 3,100 pairs a day, three seconds under the needle for each pair — Judy Peavler was good at her job, stitching the fly and zipper into Wrangler jeans.
Associated Press
At roughly $9.50 an hour, plus benefits, the job was good to Peavler, too.
Roy and Judy Peavler lost their jobs when VF Corp. cut hours, and then closed its jeans factory in Okmulgee, Okla.
So when VF Corp. cut hours at its Okmulgee, Okla., jeans factory a few years ago, Peavler waited three months for business to bounce back. Now, though, she's certain the job is gone for good.
"My dad used to preach to me to find a decent job and marry it, don't move around and around like he did," says Peavler, whose husband, Roy, also worked at the plant before it closed in April. "So I took his advice ... but it didn't do me any good."
More workers like Peavler are finding themselves in similar straits in a labor market that is behaving very differently than in past economic cycles. In past downturns, employers cut large numbers of jobs in temporary layoffs, then called many workers back once a recovery began.
But although the economy continues to rebound, most of the 2.7 million jobs lost since early 2001 won't be coming back, analysts say.
In many cases, companies are cutting jobs and limiting hiring because of structural changes in their businesses and the broader economy.
Some of it is beyond companies' control, as demand for certain products and services dries up permanently. But employers also are limiting or cutting jobs by squeezing more productivity out of existing workers, sometimes by using additional technology. Many companies have cut jobs by outsourcing work overseas.
"More and more employers are seeing the downturn in demand as an opportunity or a mandate to make permanent changes, to position themselves to be competitive when demand comes back," said Erica Groshen, an economist with the Federal Reserve Bank of New York.
Such permanent job cuts were not nearly as prevalent in past economic downturns, Groshen and a colleague, Simon Potter, concluded in a recent report.
In most past recessions, temporary layoffs accounted for 30 percent to 40 percent of the rise in unemployment, the pair found. Employers often helped workers to apply for unemployment insurance, kept in contact and called them back when business picked up.
Since those job cuts were reversible, they helped the labor market rebound quickly as the economy found its legs.
But that began to change in the early 1990s — during the so-called "jobless recovery" — when employers sent a larger share of workers home without any plans to call them back.
It is even more pronounced during the current economic cycle, with temporary layoffs accounting for just 7 percent of the rise in unemployment, Groshen and Potter found. With companies dismissing workers permanently, the kick-start provided by past callbacks from temporary layoffs is not happening this time around.
Although the recovery began nearly two years ago, the economy has lost 1 million jobs since that time. When employers added 57,000 new positions to payrolls in September, it marked the first increase in employment since January, even as the percentage of adults with jobs once again fell.
It's not just that the economy is slow to create jobs. The bottom line for workers is that many of the jobs that will eventually be created will be very different from the positions they held before.
