Hiring days are here again
By Adam Geller
Associated Press
NEW YORK — Businesses haven't given up their drive to do more with less — but they're finally acknowledging they can only go so far without adding workers.
Even as the economy grew over the past two years, businesses automated and streamlined, cut jobs and demanded more of fewer workers, "offshored" and outsourced — anything to wring more productivity and profits out of their operations.
But new employment figures released by the government Friday show the spiral of productivity gains that have long allowed companies to grow without adding jobs has its limits, economists say.
Employers added 288,000 jobs to their payrolls in April, broad-based hiring that was substantially ahead of forecasts by analysts.
It marks the second month in a row of very robust hiring, and the eighth consecutive month of payroll gains, albeit some of them quite small. That reversed nearly 2 1/2 years of job losses, dating to early 2001.
"These (figures) show that the productivity boom has subsided and that we're now reverting to a more normal trend," said David Resler, chief economist with Nomura Securities in New York.
"At some point you run out of fresh ideas (for increasing productivity) or run out of the capacity to eke more output out of each guy you've got on the job. Sometimes it's just simply exhaustion," he said.
Companies aren't going back to the way they did business in the past. They're continuing to search for ways to do things more efficiently, and many of the jobs lost won't be coming back, economists said.
But with the economy gaining steam, many employers appear to have concluded that the only way to seize the opportunities it offers is by adding people, particularly in service businesses that rely on human contact.
"Demand has been so strong that they cannot produce enough simply through productivity," said Sung Won Sohn, economist with Wells Fargo & Co. in Minneapolis. "In many service areas, where most of the jobs are coming from, productivity has limits."
Some businesses may also have taken a half step back and become more willing to hire as a weaker dollar eases pressures from foreign competitors, said David Wyss, chief economist at Standard & Poor's in New York.
"But the main thing is, frankly, that the economy picked up," he said. "I think employers have become more confident about growth and thus they're more willing to add to their labor force."
The increased demand for workers is not just strengthening, but spreading, economists said.
Jobs in professional and business services — which includes temporary agencies and consulting that are often early beneficiaries of a rebound — increased by 123,000 in April.
Both healthcare and social assistance added 30,000 jobs, and food services added 34,000 positions. Even manufacturing, whose slump accounted for most of the economy's job losses, gained 20,000 positions, the third straight monthly increase.
That shows a broad-based recovery in the job market is taking hold, job gains finally consistent with the surging growth the overall economy has experienced for much of the past year, Resler said.
The economy is still down about 1.6 million jobs from its peak in early 2001. But the employment gains of the past eight months have bolstered hopes that the turnaround in the labor market is on solid ground.
That will certainly help people who are looking for work, but it may be a while before an improved job situation helps people already working, said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University in Boston.
"The labor market has still got enough slack in it that I can hire anybody I want and I don't have to raise anybody's wages," he said. "The average worker is more likely to work, but is still not going to take any more (money) home."
