Spring Thaw for Hiring
February’s storms are among the factors blurring the jobs picture. But we see gains this year.
For the next few months, no clear picture of what’s ahead on jobs is likely to emerge. The confusing January figures -- lower unemployment but the loss of 20,000 additional jobs -- were just the start. It’s typical for an economy emerging from recession to zigzag, improving one month and backsliding the next. Plus payroll figures, derived from a survey of 400,000 firms that don’t always respond in a timely manner, often overstate gains or losses and require big revisions.
Other factors will play a role as well. February storms will likely trim payroll numbers for that month, as heavy rain and snow across much of the country forced companies to close for days. They’re also likely to mean that fewer businesses respond to the survey on time, potentially skewing the results. In addition, government hiring for the once-a-decade national census will wax and wane through spring.
With a longer horizon in mind, the outlook is clearer, however. By late spring, maybe sooner, the economy should be registering a gain of about 100,000 jobs a month. Keep in mind, that’s net jobs. There’s always churn in the economy. Each month, many positions are eliminated and many are added -- in the economy as a whole, within any one industry and within a single company. Even in the throes of recession, jobs are both gained and lost. In the second quarter of 2009, for example, 6.4 million folks found jobs but about 8 million other workers got pink slips, for a net loss of 1.6 million jobs.
That kind of job growth -- 100,000 a month -- will be enough to sustain GDP growth at about a 3% annual pace and to stabilize the jobless rate at about 9.5% through the end of the year. And there are some signals now that those better times are coming. The average workweek is lengthening. More part-timers are getting full-time work. And the number of temporary jobs has grown by nearly a quarter of a million over the past four months.
Still, the jobless rate will bounce back up before it declines further. As the economy picks up, at least some of the 2.5 million people who have become too discouraged to look for work in the past four weeks -- and have thus fallen off the official rolls of the unwillingly unemployed -- will again seek a steady paycheck. That means the share of the labor force counted as looking for work and unable to find it will increase.
Moreover, the modest job growth that’s likely will barely dent the mountain of jobs lost in the recession -- a whopping 8.5 million or so. And the huge number of long-term unemployed will present a particular challenge. More than 40% of people who lost their jobs haven’t been employed for over six months. The previous post-Depression high-water mark, in 1983, was just 26%.
Typically, finding jobs is much harder for people who haven’t worked in a long time. Every day their skills get rustier and their chances of finding new work grow dimmer. Steven J. Davis, economics professor at the University of Chicago Booth School of Business, points out that “people’s attitudes toward society and the government are altered when they’re receiving benefits for a long time. This translates into people who become long-term wards of the state ... slowing growth of the economy.”
Depressed housing prices hurt, too, stifling the usual migration of workers laid off in one region from seeking job opportunities in another, more promising part of the country. With 25% of mortgages still underwater, many folks simply can’t sell their homes and move.
What’s more, small businesses remain gloomy about orders and hiring. Because they account for about half of total employment and generate the majority of new jobs, a more upbeat attitude at small firms is critical to the turnaround.
Still, the trend is clearly in the right direction: A year ago, in January 2009, the economy shed 779,000 jobs, making this January’s 20,000 decline look pretty good. And as Heidi Shierholz, an economist with the Economic Policy Institute think tank, notes, “All the surveys are pointing to improvement.“