For sure, the high job losses sustained in December 2009—amidst an already staggering 10% national unemployment rate—are nothing to be cheerful about. It’s even more disappointing considering December’s dismal job figures represent a setback coming on the heels of the government’s newly revised numbers for November, which actually show the economy gained 4,000 net jobs that month as opposed to the initial report indicating a loss of 11,000 positions. But in the grand scheme of things, the U.S. Labor Department’s figures do confirm that a deceleration in the runaway job losses we’ve witnessed since the start of this “Great Recession” in December 2007 is under way.
That’s little solace, I’m sure, to the 8-million-plus folks who have lost their jobs over the last two years—more than 2 million of those positions manufacturing related. Furthermore, in the midst of this tenuous recovery, employers remain understandably gun-shy about restoring payrolls to previous levels.
Part of this apprehension is due to the fact that: a) employers need convincing that the surge in orders that they are now seeing is not just a fluke; and b) some businesses, quite frankly, don’t have the critical access to essential credit and financing that’s necessary to support payrolls, hire and train, and otherwise invest in the business. Further hedging is evident in the uptick in the utilization of “temporary help services,” which added 47,000 positions in December.1
This increasing dependence on temporary workers supports a commonly held belief that employers may have cut too drastically during the economic downturn and now find themselves in scramble mode to catch up with demand for new orders. “At this stage we have a level of unemployment that’s barely adequate to sustain a high level of output,” Alan Greenspan, the former Federal Reserve Chairman, said recently. “It will be virtually inevitable—if nothing else were to happen—that employment should start to come back rather quickly.”
Just don’t expect those sky-high rates to revert back to the “norm” of 5–6% anytime soon, Greenspan and others warn. Bear in mind, they say, that the creation of 100,000 jobs is required just to maintain the status quo, while 350,000 positions need to be generated per month to lower the unemployment rate by merely 1%.
What we can realistically expect, say experts like Michael T. Darda, chief economist at MKM Partners, is a slow and steady climb back to normalcy. “We’re going in the right direction,” he said. “If we just have a little bit of patience, we’ll start to see monthly increases of 200,000 to 300,000 jobs within six months.”
My money’s on the pundits.
- U.S. Job Losses in December Dim Hopes for Quick Upswing,” by Peter Goodman, The New York Times. .