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.

Slow Jobs Recovery Is Not Due to Slow Job Growth

With each new employment report, there is further evidence of the economy and job market’s continued improvement.  However, each new report also serves as a reminder of how far the economy still has to go before reaching pre-recession levels.  The slow progress has led many to conclude that job creation remains weak, but a closer look at the data reveals that current job creation levels are outpacing that which occurred during the last expansion.

Following new revisions to the employer survey data reported in today’s employment situation report, private-sector payrolls expanded by an average of 184,000 net new jobs per month in 2012.  During the two-year period from January 2001 through December 2012 monthly job gains in the private sector averaged 194,000.  So, how does this compare to other expansions?

From 2004 through 2006, the peak job creation years following the 2001 recession, private-sector payrolls increased by an average of 168,000 net new jobs per month.  So, average payroll gains are trending roughly 30,000 jobs more in the current economy.  Overall, the 35 consecutive months of positive job gains in the private sector have produced a total of 6,111,000 new jobs.  In the first 35 consecutive months of job gains following the 2001 recession (August 2003 – June 2006), a total of 5,756,000 jobs were added to private sector payrolls.

Going back further to the robust expansion years leading up to the dot.com boom and subsequent collapse (which set off the 2001 recession) employment data show that private sector payrolls were growing at a clip of about 221,000 per month.  What made this period of employment expansion so exceptional was not the number of jobs added each month, but the overall endurance of the job creation.  The 221,000 average job gains per month were sustained over an eight year period, from January 1993 through December 2000.  There was only one month in that period when more jobs were lost than were added (January 1996; 6,000 jobs lost).  Overall, private payrolls expanded by 21.2 million jobs.

It is difficult to look at the employment situation each month and conclude that we are making progress on the jobs front.  But, the fact is that this economy is indeed adding jobs and doing so at a faster rate than the previous period of expansion.  Unfortunately, we simply had a much deeper hole from which to escape.  From February 2008 through February 2010, private payrolls experienced 25 consecutive months of contraction, wiping out more than 8.8 million jobs.  That is more than the total job losses incurred in the previous three recessions combined.  It could be another 18 to 24 months before private sector payrolls reach pre-recession levels.  Of course, a lot could happen between now and then that could significantly increase job creation or derail it.  However, for the moment, the economy and employment are definitely heading in the right direction.

No Signs Of Imminent Hiring Boom

The U.S. is coming up on the three-year anniversary of the end of the 2008-2009 recession, which occurred in July 2009, according to the National Bureau of Economic Research, the arbiters of recessions’ beginnings and ends.  After eight months of continued job loss after the end of the recession, the private sector has managed to string together 27 consecutive months of net payroll gains totaling 4.3 million new jobs.  Yet, the economy is still only about halfway toward recovering the nearly 8.8 million jobs lost as a result of the recession, which is more than the number of jobs lost in the previous three recessions (1981-82, 1990-91, and 2001) combined.  Unfortunately, there are no signs of an imminent hiring boom.  The latest NFIB survey of small businesses, which are critical to job creation, found that business owners expect the U.S.economy to get somewhat worse instead of better over the next six months.  Further signs of sub-par hiring expectations can be seen in survey results released today by Manpower, which showed that while hiring prospects have improved slightly in the U.S., companies report that they will only add workers “when they have to.”  What will have to happen before companies significantly increase hiring activity?  How much longer might it take for employment levels to reach pre-recession levels?  Considering the severity of the job losses during the recession, is it realistic to have expected a full recovery by now?  Continue reading

DOES GOLDMAN SACHS LOSS PORTEND MORE BANKING SECTOR JOB CUTS?

Yesterday’s news that Goldman Sachs reported a loss of $393 million in the third-quarter raises the possibility of more job cuts in the financial sector. The slowdown in the economy and worsening debt crisis in Europe is taking a toll on U.S. banks, many of which are still struggling to recover from the 2008-2009 financial collapse. Last month, Bank of America announced plans to reduce its headcount by 30,000 over the next few years. Over the last three months, Goldman Sachs’ payroll dropped by 1,300. Through September, the financial sector has announced just over 54,000 job cuts, up from about 19,000 at the same point a year ago. “Outside of government, the sector with the biggest potential for future mass layoffs is the financial sector. Not only is the economy struggling, but the European financial crisis is looming. A collapse across the Atlantic will quickly ripple through the U.S. economy and the first sector it will hit is the financial sector,” said John Challenger, chief executive officer of Challenger, Gray & Christmas. In 2008, in the wake of the housing collapse, the financial sector announced a record 260,110 job cuts. “If the economy doesn’t improve and Europe implodes, we could see similar fallout in 2012,” Challenger warned.

August BLS Commentary: Job Market Stuck In Neutral

SMALL PRIVATE SECTOR JOB GAINS NOT ENOUGH TO DENT UNEMPLOYMENT

“Overall, today’s report on the employment situation was fairly lackluster. The job market appears to be stuck in neutral as employers hang on to the workers they have, but are unable or unwilling to add new workers. As a result, private sector payrolls grew by just 67,000 in August, well short of the level needed to make a dent in unemployment,” said John A. Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas, Inc.

In the household survey, which is used to determine the unemployment rate and more likely to capture the number of Americans who are self-employed or working for very small firms, employment gains of 290,000 were offset by 261,000 added to the ranks of the unemployed. Some of the newly unemployed may not have lost their jobs. Instead, they may have re-entered the labor force after sitting on the sidelines. The number of people categorized as not in the labor force fell by 341,000.

Other statistics were also mixed. The number of people unemployed 27 weeks or longer fell by 323,000. However, the number of people working part-time because of slack business conditions or lack of full-time positions increased by 331,000. This suggests that more people are simply trying to get their foot in the door by taking part-time assignments.

“The job market has a long way to go before it starts to look and feel like a recovery, which makes stagnant reports like today’s all the more frustrating. Progress is indeed being made, but it is occurring in such small increments and it is so tenuous that it doesn’t seem like progress at all. It is also important to remember that today’s numbers are the national averages; the view from 30,000 feet. Down on the ground, in the cities and towns, the reality is probably much different. In some areas, the situation may actually be better than today’s report suggests. Unfortunately, in many areas, the situation is far worse,” said Challenger.

August Job Cuts Plummet to 34,768

CHICAGO, September 1, 2010 – While the pace of job creation continues to disappoint, job security appears to be stronger than ever. The latest report on downsizing activity reveals that planned job cuts announced by employers in August fell to 34,768, the lowest monthly total in over a decade.

August job cuts were down 17 percent from the 41,676 cuts announced in July, according to the report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc. This marks the first decline following three consecutive months of increases. August not only replaces April as the lowest job-cut month of the year, it represents the lowest job-cut month since June 2000, when employers announced only 17,241 planned layoffs.

Full Report Available Here: http://www.challengergray.com/press/press.aspx
 

Challenger 2010 Labor Day Outlook: Jobless Recovery Stronger Than Thought

JOB MARKET RECOVERY STRONGER THAN MANY THINK; STRONGER THAN 2001 RECOVERY

As Labor Day approaches, many Americans want signs of a job-market recovery. While many are frustrated with the pace of job creation, a new analysis reveals that the job market is well on the road to recovery and that it is rebounding sooner and faster compared to the jobless recoveries that followed the previous two recessions.

In its annual Labor Day outlook, global outplacement consultancy Challenger, Gray & Christmas, Inc. says that positive trends in a number of employment indicators, including the pace of layoffs, the unemployment rate and job creation, are shrouded by the fact that the economy began its recovery in a much deeper hole; the deepest since the Great Depression.

Full report found here: http://www.challengergray.com/press/press.aspx