Job Growth Will Be Slow
12/07/2009 11:06 am EST
Knight Kiplinger, editor-in-chief of The Kiplinger Letter, says last week’s good news about employment was encouraging, but it will take time for job growth to bounce back.
Jobs are on everyone’s mind these days, as unemployment creeps up despite economic growth. There’s not a lot Washington can do, and [last week’s] White House summit meeting will yield few fresh ideas and fewer results.
While the small 11,000 net loss in jobs [in November] signals that major layoffs are near an end, there’s still plenty of slack in the economy, allowing production to increase without adding to payrolls. What’s more, as folks who had become too discouraged to look for jobs reenter the labor market, it’ll push the jobless rate up.
Expect joblessness to peak at about 10.5% and to remain in double digits through 2010. Just to hold the rate steady, the economy needs to add about 125,000 jobs a month—enough to absorb young folks seeking their first jobs plus new immigrants.
For much of the year, that won’t happen, and total employment will probably increase by only about one million next year. Indeed, it’ll be spring before the long slide in total employment ends, with businesses, large and small, finally starting to hire more workers than they let go.
In today’s risk-averse climate, few firms are willing to expand, betting on a better tomorrow. And for those that are willing, financing is tight. Meanwhile, it’ll get worse before it gets better.
Still, improvement is evident: Hiring of temporary workers is on the rise, turning up in August for the first time since early 2007. And the work week will once again expand.
The fact is, only time will cure the problem—a gradual revival of credit and a renewed willingness to take on a prudent amount of risk, especially among and on behalf of small firms, where most job creation takes place.
The best prospects for growth are in health care, a field that kept increasing throughout the recession, gaining 234,000 jobs so far in 2009. The tempo will pick up as the economy does. And passage of health care reform by Congress will only add to demand for nurses, pharmacists, home health care aides, and technical assistants.
Another early winner: The energy industry, especially nuclear, solar, and wind. In addition, human resources professionals, lawyers, accountants, and consultants are likely to see rising demand early next year. Bright spots in manufacturing include food processing, pharmaceuticals, and production of medical equipment.
At the other end of the spectrum: Construction, retailing, and finance. It’ll take years to regain prerecession employment, putting back on payrolls the 7.5 million folks who lost their jobs—not to mention the 1.5 million people just entering the labor market or the nine million part-timers seeking full-time work.