January 9, 2009 / 5:25 PM / 11 years ago

Jobs recovery months away: staffing execs

NEW YORK (Reuters) - Any U.S. job market recovery is at least several months away, staffing industry executives say, citing comments from customers, weak consumer spending and evidence in the December jobs report that employers are cutting hours and overtime.

The economy shed 524,000 jobs outside the farm sector last month, fewer than expected, and the unemployment rate jumped to 7.2 percent, the highest since January 1993. Job losses in October and November were bigger than initially estimated.

“When we look at where companies are, in the conversations they’re having, we anticipate continued job losses for at least a couple quarters,” said Jeff Joerres, chief executive of Manpower Inc, one of the world’s largest staffing and outplacement firms.

The North American chief of rival Adecco SA said a decline in overtime and total hours worked suggests more job losses ahead, since employers typically cut hours before they eliminate jobs.

“We have 150,000 clients in the U.S., and I can tell you one company after another is convinced this recession is not going away,” Adecco’s Tig Gilliam said. He predicts January and February payroll data will show cuts as deep as those seen in the quarter just ended.

“We’re in an accelerating job-loss mode,” he said.

Adecco is the third largest U.S. employer, behind Wal-Mart Stores and the postal service. Overall, U.S. staffing companies employ almost 3 million people a day and hire some 11 million temporary and contract workers a year, according to the American Staffing Association.

A further negative sign is that professional job categories are losing jobs, said Scot Melland, chief executive of Dice Holdings, which runs specialized job sites focused on areas like finance and technology.

Meanwhile, worker supply is rising, as more people reenter the work force and those anxious about their jobs start to test the waters. Job applications in the latest quarter were up 20 percent versus a year ago, Dice Holdings said.

The unemployment rate is likely to keep rising, but probably will not reach double-digits like it did in the 1970s, Melland said.

“I would look for the first signs of recovery to be toward the second half of this year,” Melland said. “This is now a consumer-driven recession.”


The U.S. job market typically lags the wider economy by three to six months, and so far efforts to stabilize the financial system have not a had a visible effect, Melland said. That underscores the need for a government stimulus that would target consumer spending.

“People who have jobs today don’t have the confidence to spend,” Adecco’s Gilliam said.

U.S. President-elect Barack Obama, who takes office January 20, is seeking approval by mid-February of his plan for tax cuts and public-works spending that could total up to $800 billion.

“I think the infrastructure investment is important and needed, but it’s also not sufficient,” Gilliam said. Friday’s jobs report “clearly puts emphasis on the need for Congress and the President to not talk about job growth but to stop the job loss first.”

Key to any Obama strategy — both short- and long-term — will have to be a focus on education, Gilliam said, citing areas like finance, information technology and medical skills.


Such high-skilled jobs offer a bright spot in the current labor market. The unemployment rate for college-educated workers is 3.9 percent, compared to 10.9 percent among those who never finished high school.

Unemployment in technology is less than half the national average, and IT specialists remain in demand in part because tech investment can help companies cut costs during a downturn, said Dice’s Melland.

Also, some parts of the country — such as Boston; Washington, D.C.; and Milwaukee — have jobless rates well below the national average, in stark contrast with areas like Detroit, Las Vegas and Los Angeles, according to Adecco.

One trend to watch is whether job losses among temporary workers slow in coming months. This part of the labor market has seen disproportionate job cuts in recent months, said Manpower’s Joerres.

“The precipitous drop we’ve seen in temp help numbers ... will now start to go more in lockstep, because you can only take so much out on the temporary side,” Joerres said.

The percentage of temporary workers in the labor force, at 1.54 percent, is the lowest since May 1996, BMO Capital Markets analyst Jeffrey Silber said in a research note.

“The bottoming of this metric typically correlates to the end of a recession,” he said. “Unfortunately, we’re not there yet.”

Editing by Patrick Fitzgibbons and Phil Berlowitz

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