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Layoffs becoming rarer, but hiring hasn't rebounded

California Employment Program representative Brigitta Croil helps job seeker Freddy Gomez look for a driver’s job at the Verdugo Job Center in Glendale, Calif.

Associated Press

California Employment Program representative Brigitta Croil helps job seeker Freddy Gomez look for a driver’s job at the Verdugo Job Center in Glendale, Calif.

WASHINGTON — The U.S. labor force has been split into two groups: the relieved and the desperate.

If you have a job, you can exhale; you're not very likely to lose it.

If you're unemployed? Good luck. Finding a job remains a struggle 20 months after the recession technically ended. Employers likely won't step up hiring until they feel more confident about the economy.

A result is that people who are unemployed are staying so for longer periods. Of the 13.9 million Americans the government says were unemployed last month, about 1.8 million had been without work for at least 99 weeks — essentially two years. That's nearly double the number in January 2010.

Yet the deep job cuts of the recession have ended. In January, companies announced plans to trim fewer than 39,000 jobs, according to outplacement firm Challenger, Gray & Christmas. That was 46 percent fewer than a year earlier. More strikingly, it was the fewest number of planned layoffs in January since Challenger began keeping track in 1993.

Eventually, consumer spending will rise high enough that companies will need to accelerate hiring to keep up with demand. In the meantime, a fading fear of layoffs is likely helping the economy, encouraging consumers who have jobs to spend more.

"The fact you know that the paycheck is going to be coming in now and for the foreseeable future gives you permission to do some extra spending," says John Challenger, CEO of Challenger.

Retailers, in particular, have stopped shedding workers. After the best holiday shopping season in four years, stores cut fewer than 5,800 jobs last month. That's about one-third the number of a year earlier. And it's far fewer than the nearly 54,000 in January 2009 at the depths of the recession.

"If you're bringing value to your company, you don't have to worry," says Mickey Kampsen, president of Management Recruiters of Charlottesville, Va.

Yet employers still aren't ready to start hiring aggressively. A government survey of business payrolls released Friday showed a net gain of only 36,000 jobs in January — barely one-fourth the number needed just to keep pace with population growth. Harsh winter weather helped explain the weak hiring, but not entirely.

A bigger factor is that companies have become more productive. After slashing jobs during the recession, they discovered they could produce the same, or more, with smaller staffs.

A company that might have had a half-dozen people working on business development, for instance, might now have three, says Bobbi Moss, vice president of executive recruiters MRINetwork Govig & Associates in Scottsdale, Ariz.

Businesses have created an average of just 82,000 net jobs each month over the past year. That's fewer than half the number a strong economy would be expected to create. It's why so many unemployed people have been left stranded, unable for many months to land jobs.

An average of 4.6 unemployed people are competing for each job opening, the government says. In a healthy job market, no more than two people would be vying for each opening.

The Labor Department says that at the end of last year, 28 percent of people who had been unemployed for fewer than five weeks found a job in a month. By contrast, only 10 percent of those unemployed for at least 27 weeks found work within a month.

Long-term unemployment has grown so much that the department is changing how it records it. It will now calculate how many people have been out of work for up to five years. Previously, it tracked long-term unemployment only up to two years.

Layoffs becoming rarer, but hiring hasn't rebounded 02/06/11 [Last modified: Sunday, February 6, 2011 9:14pm]
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