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Where are the jobs? Battling a slowdown in job creation

A few months ago, temporary staffing manager Jeremy Dixon was confident the gears of job creation were finally cranking again.

One of his manufacturing clients hired 18 temp employees and another hired a dozen.

Then came July. Both companies cut way back to just two or three hires apiece.

"Their workload has tailed off," said Dixon, who runs Brandon-based A1 Temps.

Few predicted a smooth climb toward economic recovery after the deepest recession since World War II. Still, the setbacks on the employment front this summer have left job placement experts like Dixon exasperated.

Exhibit 1: After dropping to a lower level most of the year, new claims for jobless benefits are rising again. The Labor Department reported Thursday that new claims reached a nine-month high last week, hitting the psychological threshold of a half-million again. Florida — with layoffs in construction, trade, service and manufacturing — was one of 10 states to post an increase of more than 1,000 claims.

Exhibit 2: Companies are hiring fewer temp workers. Temp hiring, a typical barometer for when employers are poised to bring on more full-time workers, had been rising an average of 45,000 workers a month nationally between October and May. It slowed down to 11,200 in June before posting a loss of 5,600 workers in July.

"(Temp hiring) was sending a strong signal that the job market was recovering, and now we've got a two-month signal where things have petered out," said Scott Brown, chief economist with Raymond James Financial in St. Petersburg. "Granted, it's just a couple of months, but if it stays down … that's not good. The near-term is troublesome."

Florida's unemployment statistics for July come out today. The biggest question here is the same one resonating across the country: When will private employers start hiring again?

Based on the national jobs report, Florida will be hard-pressed to overcome the loss of part-time U.S. Census Bureau jobs, which helped prop up the labor markets in the spring.

Nationally, private employers added 71,000 jobs last month. But that relatively mild increase was more than offset by the loss of 202,000 government jobs, including 143,000 temporary census positions.

The number of Americans continuing to claim jobless benefits fell by 13,000 last week, but economists said that was largely due to longtime idle workers seeing their benefits expire. The number that raised more eyebrows Thursday was the increase in first-time unemployment claims for the third week in a row.

"The labor market is backtracking more than we first expected," Ryan Sweet, an economist at Moody's Analytics, wrote in a note to clients.

"It seems as if the underlying pace of layoffs has accelerated somewhat recently," said Omair Sharif of RBS Economics Research.

Florida, likewise, has seen the number of layoffs rise over the past month. Among notable local downsizings, Pricewaterhouse­Coopers confirmed it was laying off about 500 information technology workers in Tampa.

On the other hand

Not everyone is convinced the job market is headed into a second downturn. In recent months, Florida has been buoyed as its unemployment rate dropped from a modern-era record 12.3 percent in March to 11.4 percent in June.

Doug Arms, senior vice president for staffing firm Ajilon in Tampa, cites growing demand for the segment he targets: professionals in accounting, administration, human resources, marketing, IT and legal who have at least a bachelor's degree.

"What's different is the way that companies are hiring," he said. "In a strong economy, you'll find more positions that off the bat are full-time positions, but not now. … Companies want to hire full-time staff, but (they're) doing it on a temp-to-perm basis."

Economists suggest several reasons for employer reluctance to convert part-timers or temps to full time: rising health care costs, a cloudy economic outlook, and the fear of higher taxes or more regulation.

Brown of Raymond James said some larger companies could afford to hire more workers because of higher profits. But typically small companies account for the vast majority of job growth when pulling out of a recession. And for many small companies, he said, both profits and easy access to credit are still elusive.

Consumers are still wary of spending too much. Banks may be more open to lending, but not necessarily to those hungry for the money.

"We still have what is essentially a crisis of confidence at this point," Brown said.

Dixon of A1 Temps offers another explanation for why companies might be slow to hire: They don't want to endure the financial or emotional toll of recruiting workers whom they might then have to lay off.

Susan Mell, who coaches individuals and small business entrepreneurs in the bay area, insists "the jobs are out there." But she urges job seekers to accept "a new normal," as an increasing number of employers prefer to hire contract workers instead of full-time employees.

"We will not go back to where we were," she said. "We're becoming more and more of a contract employment society."

That could mean the loss of company-paid benefits like health care and less job security. But it also means more flexibility and freedom to leverage one's skills with various employers at the same time.

Moreover, job security isn't what it used to be, Mell said, citing one estimate that the average job lasts less than three years.

"One guy I worked with … said he was downsized four times (in eight years)," she added. "He said, 'I want to get off this merry-go-round.' ''

Information from Times wires was used in this report. Jeff Harrington can be reached at jharrington@sptimes.com or (727) 893-8242. Follow him on Twitter at twitter.com/jeffmharrington.

Florida's unemployment rate in June was 11.4 percent. The state's jobless rate for July and other jobs data are being released at 10 a.m. Friday. Go to www.tampabay.com for details.

Where are the jobs? Battling a slowdown in job creation 08/19/10 [Last modified: Thursday, August 19, 2010 9:59pm]
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