Issue of the week: No relief on the jobs front
Though they are slowing, job losses are still occurring in almost all sectors of the economy.
About the best that can be said about the U.S. job market is that it’s getting worse at a slower rate, said Patricia Marroquin in HispanicBusiness.com. While there are some signs of an economic rebound, last week’s employment survey from the Conference Board showed that businesses were still busily slashing payrolls, but without quite as much fury as in earlier months. “The most intense stage of job losses may be behind us,” says Conference Board economist Gad Levanon. But labor-market experts can’t say when the job market will stop falling and actually bounce back. In the Society for Human Resource Management’s latest poll of human-resources professionals, seven of 10 “foresee a weak hiring environment in the second quarter of 2009.” The job losses are extending into all corners of the economy, said Jeff Thredgold in MainStreetBusinessJournal.com. From construction to retail, manufacturing to government, “almost no sector is avoiding job cuts.” Only health care and education reported increased hiring in the Labor Department’s latest employment survey, “although the net increase of 8,000 jobs was the weakest in that sector in many moons.”
It’s hard to overstate how rare it is for health-care employment to shrink, said Avery Johnson and Kelly Evans in The Wall Street Journal. “Health care usually weathers downturns better than many other industries because consumers tend to cut spending on cars or clothes before they forgo trips to the emergency room or pharmacy.” But it’s different this time. Hospitals are caught in a vicious cycle of falling revenue, a drop in elective procedures—“which reap big profits”—and a rising number of uninsured patients. As a result, they’re trimming payrolls, freezing hiring, and delaying expansion plans. Hospitals in Pittsburgh, New York, and Boston have announced layoffs, and “pharmaceutical firms and health insurers are also shedding jobs,” with Johnson & Johnson announcing 900 layoffs just last week.
The job cuts that aren’t being announced are no less disturbing, said Moira Herbst in BusinessWeek. “With the American economy flashing Code Red, companies from Wall Street to Silicon Valley are casting off temporary workers and freelancers left and right, typically without any severance pay.” Heavy-equipment maker Caterpillar, for instance, has cut 8,000 contract and temporary workers in recent months. And because part-timers and contract workers often don’t qualify for unemployment benefits and rarely have employer-provided health insurance, they’re straining already frayed social safety nets. “That only worsens the recession,” says Beth Shulman of the Russell Sage Foundation, a social-science research group.
At least many of those workers can expect to be rehired when business picks up, said Ted Evanoff in The Indianapolis Star. The bulk of the jobs lost in the Midwest have been in automobile manufacturing and related industries, and even when the economy recovers, firms in those industries will be staffed for smaller markets and lower sales. Manufacturers are “going to do it with fewer people,” says economist Diane Swonk of Mesirow Financial in Chicago. “There’s really no escaping that.”