U.S. companies ask workers to do more rather than hire

Job seekers wait in a line for a turn to speak with a recruiter at a job fair in San Francisco, September 15, 2009.

NEW YORK (Reuters) - Like many U.S. employers, Tish and Snooky Bellomo are asking their workers to take on additional duties, rather than hiring new employees, at their New York cosmetic and hair accessory company.

Earlier this year the two got rid of a consultant and, rather than rehiring, turned to their 13 employees at Manic Panic, which has sold punk rock inspired fashions and hair dyes since 1977, and asked them to pick up the slack.

The two are not alone in foisting more responsibilities on employees of their cluttered packaging facility floor in a gritty neighborhood in Queens in New York City. Government data earlier this month showed U.S. employee productivity rose at its fastest pace in six years in the third quarter of this year.

The 9.5 percent jump at an annual rate in the amount of output per employee came at a time when many American employers are slashing jobs in an effort to cut costs. The U.S. unemployment rate climbed in October to 10.2 percent, a 26-1/2 year high.

"We have given people a lot more responsibility since we have gotten rid of this consultant, so now everyone is doing everything and people are not just doing their specific job," says Tish Bellomo, who co-founded the company with her sister.

Employees now handle public relations and marketing duties formerly managed by the consultant.

The Bellomo sisters are unusual in that the deepest recession in decades has not hit their business. In fact, Manic Panic is having their best year ever, with revenues expected to top $5 million in 2009.

It seems that rather than spending upward of $200 at a salon for a hair dye job, people are instead paying about $12 for a jar of the dye, either online or at a retail outlet, and coloring their hair with "vampire red" or "atomic turquoise," themselves at home.

"We have always done well when times are hard because what we sell is a quick fix. You can get a whole new look really cheap. It is such an inexpensive way to change your entire look," Snooky says.

Rather than hiring new staff to meet demand, the sisters are drawing more heavily on their employees. So far, those employees say the extra responsibility, and time at work, have not been a particular burden.

"Everyone jumps in, you just try and get more done during the day," says Ken West, who is unofficial manager of sales and has worked for the company for 15 years, adding "I'm working harder, and faster during the day, so I am certainly more exhausted."

Rising worker productivity comes as the U.S. economy continues to shed jobs. As of October, U.S. employers' payrolls had declined for 22 months and 7.3 million people had lost their jobs since December 2007.

A wide gauge of labor-market slack that includes unemployed Americans who have given up looking for work hit a record 17.5 percent last month, the government said.

A recovery in jobs is seen by economists as crucial to any kind of return to a healthy economy.

While employers are requiring more output from the same or even fewer number of people, some economists say the jump in productivity may have used up much of the productivity slack in the existing workforce.

"Companies are clearly determined to maintain very tight control over labor costs in the face of a once-in-a-lifetime collapse in demand, but they surely cannot keep up this pace," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Shepherdson is looking for productivity to slip 4.0 percent in the fourth quarter.

Rather than hiring, data suggests U.S. companies are holding on to cash while economic uncertainty looms.

Standard and Poor's has said cash and its equivalents for the S&P industrial companies in the third quarter was 12 percent ahead of the record set in the second quarter of over $770 billion.

But back at Manic Panic, the Bellomo sisters are holding off on hiring while they ask their employees to do more.

"If we were going to add people we would do it now because there are so many good people out there that are desperate for jobs -- so many people we know in fact," Tish says.

"We had one really good salesperson who left for a better paying job, and now she is coming around asking if we are hiring any sales people," she said.

(Reporting by Chris Reese: )