New Survey Finds Obstacles To Post-Recession Job Creation

A new survey of human resources executives provides further evidence of just how difficult it is in a non-manufacturing-based economy to quickly increase employment following a downturn and why it could be another year or more for the unemployment rate to fall to pre-recession levels.

In the survey conducted by global outplacement consultancy Challenger, Gray & Christmas, Inc., just over half (53 percent) of the human resources executives polled said their companies implemented workforce reductions as a result of the recession that began in December 2007 and ended in June 2009.  The good news is that 82 percent of companies have added new workers since January 2010.  However, while 33 percent of those hiring were able to bring back some of their former workers, 67 percent indicated that the re-staffing process started from scratch.

Meanwhile, less than half (43 percent) of the companies adding new workers have reached or surpassed the number of workers employed prior to workforce reductions.  Nearly 15 percent said they expect to eventually return to pre-layoff workforce levels. However, 43 percent indicated that their companies will meet future demand with fewer employees, suggesting that their payrolls will never return to pre-recession peaks.

“What we have come to know as ‘the jobless recovery’ may be the new post-recession norm, as employers rebuild their workforces from scratch, take more time to vet candidates, and find ways to operate with fewer workers,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Get the survey results here.

Housing Market Tied to Job Creation

Two Reports Illustrate Housing’s Importance to Job Creation

Two news stories this morning illustrate the daunting challenges the economy continues to face on the road to recovery.  First, a New York Times article points out that the Obama Administration was too slow to address the housing market crisis, which has been a major drag on the economy.  Meanwhile, a report from the Federal Reserve Bank of New York estimates that about one-third of the jump in unemployment from 5 percent to its 10 percent peak in October 2009 can be traced to a mismatch between the supply of labor and job openings.  The remaining two-thirds of the increase is due mainly to a lack of demand.  The two reports are more related than one might imagine.  “If you fix the housing crisis, you fix the job market,” says employment authority John A. Challenger, chief executive officer of Challenger, Gray & Christmas.  “Both the skills mismatch and lack of demand can be traced back to ongoing weakness in the housing market.  Job seekers cannot relocate to where the job opportunities exist because they are tied down by underwater mortgages and little savings to fund a move.  Meanwhile, the lack of home buying is stifling demand for consumer goods and services.  When people buy new homes, they also buy new TVs, washers and dryers, refrigerators and furniture.  The lack of demand for these big-ticket items translates to a lack of hiring.”  Should the Administration and Congress have done more to help home owners and the housing market?  What can be done now to accelerate a housing market recovery?  What other factors are leading to continued weakness in hiring?

Economic News Sapping Confidence

The recent spate of weak economic news and the ongoing threat of a European financial disaster are sapping the confidence of consumers and business leaders alike.  The latest reading on consumer confidence by the Conference Board declined for the fourth consecutive month in June, as consumers expressed a gloomier outlook for future business conditions and income.  Meanwhile, the Business Roundtable’s quarterly survey of CEOs from the nation’s largest companies found them less optimistic about sales, capital spending and hiring in the second quarter.  Only 36 percent of CEOs expected their companies to add more workers over the next six months, down from 51 percent at the same point last year.  The latest data from the Bureau of Labor Statistics suggest that hiring may indeed be heading for a summer slump.  The Bureau’s Job Opening and Labor Turnover survey found that employers hired 4,175,000 new workers in April, down from 4,335,000 the previous month.  What will it take to boost confidence among consumers and business leaders?  Why does falling confidence virtually ensure that that the economy will remain in a weakened state through the summer?  Are there any bright spots in the economic or employment picture?

Despite High Unemployment, Companies Struggling to Fill Openings

While recent reports indicate a softening job market heading into the summer, one new study reveals that some of the slowdown in hiring may be due to a lack of talent.  According to the Bureau of Labor Statistic’s Job Openings and Labor Turnover survey, there were 3,416,000 job openings at the end of April.  That was down from 3,741,000 job openings in March, but it was still significantly higher than the 3,014,000 openings the previous April.  Unfortunately, these openings appear more and more difficult to fill.  In a new survey by CareerBuilder, 38 percent of employers reported having positions for which they cannot find qualified candidates.  One-third (34 percent) reported that job vacancies have resulted in a lower quality of work due to employees being overworked, and 23 percent cited a loss in revenue.  What steps can be taken to alleviate the widening skills gap?  With labor force immobility contributing to the shortage of skilled workers, what can companies and local governments do to help get workers with the right skills to the places where they are most needed?  

Older Job Seekers In Demand

Recent reports reveal the challenge older job seekers face in the current hiring environment, with more than one-third of those 55 and older experiencing prolonged joblessness lasting longer than a year.  However, the situation for older workers is not entirely grim.  In fact, a new analysis of employment trends reveals that this segment of the population is enjoying the strongest job gains of any age group.

The analysis of government labor data by global outplacement consultancy Challenger, Gray & Christmas, Inc. found that job seekers age 55 and older account for nearly 70 percent of the employment gains since January 1, 2010.

Overall, the number of employed Americans has increased by 4,319,000 between January 2010 and May 2012, according to household survey data from the U.S. Bureau of Labor Statistics.  Older job seekers – those 55 and up – accounted for 2,998,000 or 69 percent of the total employment growth. Continue reading

Weak Job Creation Due To Decreased Demand, Uncertainty

“Today’s employment situation report as another lackluster month of job creation, with employers adding just 115,000 jobs. The unemployment rate did fall again last month, dropping another tenth of a point to 8.1 percent, but the decline was due primarily to a shrinking civilian labor force rather than employment gains. It is looking more and more like we will see a repeat of last year’s spring and summer lull in job creation. Job creation, while in positive territory for 26 consecutive months, has definitely ebbed and flowed. Even at its best, job creation is falling well short of what is needed to make a substantial dent in unemployment. While some would like to attribute the lack of hiring to uncertainty and regulatory roadblocks, the fact is that demand for goods and services simply has not reached a level that warrants accelerated hiring. In areas, where demand has improved, so has hiring. Just look at the auto industry. Chrysler just announced that it will forego it’s usual summer shutdown and keep all its plants humming in order to meet consumer demand. Until more companies are experiencing the same type of demand, we are not going to see an explosion in hiring.”

- John A. Challenger, CEO
Challenger, Gray & Christmas, Inc.

Companies Threaten To Leave IL; Want Tax Breaks


The state of Illinoiscould soon find itself in the midst of a mass corporate exodus.  Several major employers, including Sears Holdings Corp., Caterpillar and the CME Group, are threatening to leave the state in search of more friendly corporate tax environments.   These three companies alone employ more than 30,000 workers in the state, but thousands more could be impacted as the departures ripple through the local economies that depend on these firms and their employees.  The state may be willing to negotiate with these companies in order to prevent them from leaving, but Illinois, like many other states, is facing significant budget deficits.  How could the loss of major employers impact the recovery in Illinois?  Should the state negotiate better tax terms to keep employers in the state?  Could tax breaks tied to job creation help spur growth or will it accelerate the departure of employers?

Good Auto News

In addition to the construction jobs that will be created to repair and upgrade Michigan’s railway system, the state received more good news this week when Detroit-based General Motors announced expansion plans that would result in 4,200 new jobs across several states.  About half of the new jobs will be in Michigan, with others being created in Ohio, Tennesseeand New York.  The 4,200 new hires by GM will be added to the 7,700 new hires announced by the automotive sector through April.  That is up from hiring plans totaling 2,434 at the same point a year ago.  Is the automotive sector experiencing a comeback?  Will high gas prices threaten job creation in the auto industry?  Will the auto industry have difficulty finding enough people with the right skills to fill their openings?  











































Challenger, Gray & Christmas, Inc. ©


Commentary on April Employment Situation

Strong Job Creation Provides Optimism

 “This morning’s employment report marks the third consecutive month in which payrolls saw a net gain exceeding 200,000, with jobs being added across several industries.  We are finally seeing steady job creation.  The report was also positive in that the number of long-term unemployed fell by nearly 300,000. 

“The slight increase in unemployment to 9.0 percent was inevitable.  It may rise even further in the months to come as the job market improves.  The reason is that people who had abandoned their job searches out of frustration will rejoin the pool of available labor and once again be counted among the unemployed. 

“Obviously, we still have a long way to go before job creation and employment reach pre-recession levels.  It is not going to happen overnight, especially considering that we just experienced the worst recession in decades; one that spanned globally.  Today’s report, as well as our data showing very low corporate downsizing activity, should provide some optimism going forward.”

-         John A. Challenger, CEO, Challenger, Gray & Christmas, Inc.

McDonald’s National Hiring Day To Create 50,000 McJobs

Today is McDonald’s National Hiring Day, the day the national restaurant chain plans to add 50,000 new workers to its ranks.  An impossible task, you say?  Not necessarily, when you consider that the chain has more than 14,000 restaurants across the country, which means that each one will be adding about 3 to 4 new employees.  What makes this Hiring Day so significant is that in one day one employer will account for roughly 10 percent of the monthly hiring completed by the entire accommodation and food services industry, which has averaged about 500,000 new hires per month over the last six months.  And, while some would like to discount these new jobs as low-skill, hourly-wage positions, Challenger, Gray & Christmas CEO John Challenger says these are precisely the types of jobs that are needed to address the highest rates of unemployment, which currently exist among teenagers (24.5%) and those over 25 without college degrees (10.5%).  These McJobs often offer a springboard to bigger and better opportunities.  According to McDonald’s, more than half of its franchisees, 75 percent of its managers, and many of its corporate staff and executive leadership started behind the counter.  Additionally, the company maintains a scholarship program, offers advanced management training at its HamburgerUniversity, and gives restaurant managers the chance to earn college credit.  Does the McDonald’s hiring level indicate a stronger economy?  What other opportunities exist for teen job seekers this summer?  What other industries and companies are announcing big hiring plans?