April 11, 2008


Jobs May Take a Smaller Hit This Time: Companies went into this recession with exceptionally lean payrolls. The economic stimulus and other policy efforts will also help avert big losses (James Cooper , 4/10/08, Business Week)

[S]everal factors unique to this business cycle will help to ease the pain, and the massive fiscal and monetary stimulus in the pipeline is only part of the story.
Conservative Hiring and Firing

Start with unusually conservative hiring over the six years since the last recession. Private-sector firms added only 80,000 workers per month, on average, by far the slowest pace of job growth in any of the 11 post-recession periods since World War II. That means businesses entered the current slump with very lean payrolls and, as a result, fewer need to lay workers off.

Recently, companies have been slow to hireā€”but slow to lay workers off as well. Since the market turmoil began last summer, Labor Dept. data (through February) show job openings have fallen almost exclusively because of a slower hiring rate. The rate of separations has been unchanged. Layoffs are part of any recession, but so far companies are making a strong effort to retain workers.

Demographics may have a lot to do with it. Over the past decade, the proportion of much coveted workers aged 55 and over has soared from 12% to 18%, based on the Labor Dept.'s household survey. Since January, 2007, jobs held by these workers have increased by 1.5 million, while jobs held by all other age groups have fallen by 1.5 million. In the past, jobs for workers under 55 started to drop close to the start of a recession, never a full year before.

That means businesses already have been making significant adjustments to their payrolls. [...]

The atypical, housing-led nature of the current slump is also a factor. Payroll adjustments in housing-related jobs in construction and certain manufacturing and service industries have been going on for two years and are well advanced.

If they could have done away with your job they would have ten years ago.

Posted by Orrin Judd at April 11, 2008 6:08 AM

The guy in the office next door retired last June. I've been doing his job and mine for the last 9 months. I make $50,000/year less than he did and the employer is only paying one set of benefits. There is no plan to replace him. I'm doing two jobs for the same money I used to make. There is no reason to get rid of me.

I suspect this story is not unique. American industry is running lean and mean (lean and grumpy?) There just isn't a whole lot of fat to cut unless you've just pulled off a merger or prior management has been extrordinarily stupid.

Posted by: Tygurr at April 11, 2008 6:42 AM

Whenever I read these stories, I am continually amused by the impression that the Information Age does not apply to Human Resources. And per the discussion of Demographics in this story, I wonder what their reaction will be when they find out that Baby Boomers will stay in the workforce well into their seventies.

Posted by: Brad S at April 11, 2008 6:53 AM

And besides, all the slaggards have settled into jobs in the government where positions have swelled and are busy not working for their great pension.

The super slaggards have settled into SS disability, the new general welfare.

Posted by: Perry at April 11, 2008 8:15 AM

We won't be safe until the voters make the government run as "lean" as these businesses.

Especially the bloated and corrupt schoool districts.

Here in IL, Dupage Co. just "spent" a tax windfall on "saving the jobs of 200 workers."

This is pork and patronage. Just how many workers are needed to 'run' a county?

Posted by: Bruno at April 11, 2008 8:29 AM

It is an interesting contrast between the fates of Alitalia and the four US airlines that have shut down in the past month.

Posted by: ratbert at April 11, 2008 10:15 AM