Unemployment still high as planned layoffs drop

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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 less likely to lose it than at any point in at least 14 years.

If you're unemployed? Good luck. Finding a job remains a struggle 20 months after the recession technically ended. Employers won't likely 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 long since 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. For all of 2010, planned layoffs hit a 13-year low.

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: It's 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, the 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 only 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, the president of Management Recruiters of Charlottesville, Va.

Courtney Miller-Rao, 28, is feeling more secure about her job than at any time since she began working a decade ago. She's an auctioneer, selling cars for an auto salvage company near Waterbury, Conn.

"We're growing immensely, we're opening a new branch, selling more cars," she says. "I don't feel like I have to work 10 to 14 hours a day to keep my job."

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.

EVENTUALLY, EMPLOYERS will find they can't keep squeezing ever-higher output from their slimmed-down staffs that survived the recession. Stronger customer demand will require more workers.

Reports from the Institute for Supply Management indicate that both service and manufacturing companies plan to step up hiring because of a rise in orders.

Even then, many of the unemployed might be left out. That's because even companies that must hire will often avoid unemployed applicants -- especially those who've been out of work for many months.

The Labor Department says that at the end of last year, 28 percent of people who'd been unemployed for fewer than five weeks found a job the next 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.


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