The New Job Reality
As businesses cut costs and boost productivity, the labor market shrinks. Job seekers will have to fine-tune their skills and adjust expectations
Last month the official arbiter of economic cycles, the National Bureau of Economic Research, declared that the 2001 recession lasted a mere eight months, one of the shallowest slumps since World War II. Tammy Swales begs to differ. In October, the 36-year-old lost her job when the Rochester, N.Y., nonprofit she ran reorganized. With a resume that also boasts a master's in education and eight years of teaching, Swales thought she'd have no problem finding another job, even if it paid less than the mid-$60,000 salary she once enjoyed. Despite sending out scads of resumes, Swales has managed to score only a handful of interviews--and no job offers. She strives to remain upbeat, but, she says, "it's getting hard to be positive."
Uh-oh. With an election on the horizon, that's not what President Bush wants to hear. Thus he dispatched three of his disciples on a bus tour of the Midwest last week to preach the gospel of jobs and growth. "Right now we have the best set of economic conditions we've had in decades," Commerce Secretary Don Evans repeatedly told workers, business owners, and investors across Wisconsin and Minnesota, citing low interest rates, controlled inflation, and recent tax cuts. On a plush motor coach next scheduled to ferry the rock bands Aerosmith and KISS, Evans, Labor Secretary Elaine Chao, and Treasury Secretary John Snow chatted up the reviving labor market while touring a Harley-Davidson factory, savoring frozen custard at a Culver's Restaurant, and munching a Wisconsin delicacy, cheese curds, at a forklift dealer. "Right now there are employers looking for employees with the right skills," Chao told staffers at the Mayo Clinic in Rochester, Minn.
That optimism flies in the face of hard numbers. The U.S. economy has lost nearly 1 million jobs since the recovery began in November 2001. That's in addition to the 1.6 million jobs that vanished during the brief recession. Unemployment remains above 6 percent, and the economy continues to shed jobs. Last month, an additional 44,000 jobs vanished, making July the sixth straight month of losses. Just last week, Pillowtex, a manufacturer of sheets and towels, filed for Chapter 11 bankruptcy, leaving 6,450 workers jobless; May Department Stores said it will close 32 Lord & Taylor stores, putting 3,700 workers out on the street. "This has been the worst recovery we've had in terms of employment since the 1950s," says Scott Schuh, an economist at the Federal Reserve Bank of Boston.
To be sure, the recovery's sluggish pace--the economy grew at a rate of 2.4 percent last year and has grown at a rate of just 1.9 percent so far this year, well below the 3.5 percent historical trend--has kept many of the unemployed from returning to work. In ordinary recessions, companies typically lay off workers on a temporary basis, rehiring them when demand revives. But some economists say there's something else going on this time. The dearth of jobs stems from factors signaling a sea change in today's business world: namely, higher productivity, altered management and hiring practices, and the flight of both blue- and white-collar jobs overseas. Many of the changes in the labor market are structural, not cyclical. "It's similar to what we saw 50 years ago when people began to leave farms," says Greg Mankiw, the president's top economist. "One of the ways economies grow is people moving from one sector to another." In short, the message to the nation's 9.1 million unemployed is: Don't hold your breath. Your old job may never return.
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