The Jobs Picture Looks Less Bleak
03/03/2010 12:00 pm EST
Knight Kiplinger, editor-in-chief of The Kiplinger Letter, says plenty of woes remain, including a coming blip in unemployment, but things are definitely improving.
With a longer horizon, the picture is clearer: 100,000 jobs a month added by late spring, maybe sooner. Keep in mind: That’s net jobs. There’s always churn, many positions eliminated and many added in the economy as a whole, within any one industry and within a single company.
Even in the throes of recession—[the] second quarter [of] 2009—6.4 million folks found jobs. But about eight million other workers got pink slips, a net loss of 1.6 million jobs.
Job gains will be enough to sustain gross domestic product growth at about a 3% annual pace and to stabilize the jobless rate at about 9.5%. Two signals of better times ahead: A longer workweek and a quarter of a million new temp jobs in the past four months.
But the jobless rate will bounce back up first. As the economic pickup spurs the 2.5 million people too discouraged to look for work in the past four weeks to again seek a steady paycheck, they’ll once more be officially tallied as unemployed.
And the modest job growth will barely dent the mountain of jobs lost in the recession—8.5 million or so. A particular challenge: The huge number of long-term unemployed. More than 40% of people out of work haven’t been in jobs for over six months. The previous post-Depression high-water mark: 26% in 1983. Each day, their skills get rustier and their chances of finding new work grow dimmer.
Depressed housing prices hurt, too, stifling the usual migration of workers laid off in one region from seeking job opportunities in another part of the country. With 25% of mortgages still under water, many folks can’t sell their homes and move.
What’s more, small businesses remain gloomy about orders and hiring. Because they account for about half of total employment and generate the majority of new jobs, a more upbeat attitude at small firms is critical to the turnaround.
Still, the trend is clearly in the right direction: A year ago, in January, 2009, the economy shed 779,000 jobs, making this January’s 20,000 decline look pretty good.Subscribe to The Kiplinger Letter here…