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Jobless rate and recession fears rise

Unemployment hit 5% in December, the highest since 2005, and only 18,000 jobs were created. Who feels the trend? Job-market agencies.

Recession fears deepened yesterday as the government reported that the economy created just 18,000 jobs in December and that the unemployment rate hit 5 percent, the highest since Hurricane Katrina walloped the job market in 2005.

The numbers sent Wall Street into a swoon and led President Bush to say he was considering an economic stimulus package. "We can't take economic growth for granted," he said.

Tepid job growth increases the likelihood that the Federal Reserve will soon take action to drive interest rates lower in a bid to depressurize the economy by making borrowing cheaper for consumers and businesses.

That's the macro way presidents, bankers and investors react when they hear this kind of news.

But when it comes to employment, recruiters, outplacement counselors, advocates for the unemployed, and staffing analysts already know what the Labor Department reported yesterday:

It's beginning to get tough out there.

"If I got depressed by this stuff, I would have stopped a long time ago," said John Dodds. As director of the Philadelphia Unemployment Project, Dodds has been advocating for the unemployed since the early 1970s.

"There will always be recessions," he said. "They will always be horrible. The beauty of it is that they are always going to end. The trick is to help people get through them without getting destroyed."

Elva L. Bankins, an executive recruiter and senior vice president at CEO Resources Inc. in Center City, says she can gauge the economy by checking her e-mail.

When the job market is tight and employees feel secure, her e-mailed feelers about job openings net a few dozen return messages.

When the unemployment rate rises, "I get tons and tons of responses, hundreds of responses," Bankins said.

Right now, "people are nervous," she said. They may have a job right now, but "people are looking because they are not sure about the future of their organizations."

Wall Street had eagerly awaited yesterday's numbers, partly because of the possibility that they would alleviate or exacerbate fears of a recession.

"Since 1949, the unemployment rate has never risen by this magnitude without the economy being in recession," John Ryding, chief U.S. economist at Bear Stearns Cos. in New York, said in a note to clients. "We now put ourselves on recession watch."

Jon Osborne has already been watching. He is director of research for Staffing Industry Analysts Inc., a California research firm that analyzes the staffing industry.

"The story we are seeing is that temporary-staffing growth had been de-accelerating for a while," Osborne said. In December 2006, more than 2.64 million were employed as temporary workers. Last month, the number dropped to 2.595 million.

Typically, Osborne said, a decline in temporary hiring signals a slowdown. Companies will cut temps before laying off full-timers.

Osborne especially watches the unemployment rate for college graduates - still low at 2.2 percent in December, but up from 1.9 percent in 2006.

"Two percent is the tipping point," he said. When that rate goes below 2 percent, companies turn to outside recruiters for help in filling their positions. Above that, companies may be more inclined to do their own hiring. That leads to a decline in the staffing industry - a trend borne out by yesterday's labor report.

However, Doug Fearon, managing partner of the Rosen Group in Voorhees, which specializes in human-resources staffing, says business remains steady.

Yesterday morning, he had a meeting with a company that had laid off its two recruiters during an earlier downturn. Now, it wants to hire some temporary recruiters to fill some openings.

"Whenever the unemployment rate is about 5 percent, we're going to have better talent more readily available," Fearon said.

Yesterday's higher unemployment rate came as no surprise to Brian Clapp, vice president at Right Management, the Philadelphia-based outplacement division of Manpower Inc.

Companies hire Right to help their laid-off employees find new jobs.

"We tend to be a countercyclical industry," Clapp said. "When the business climate dips or unemployment rises, we typically see more layoffs. That's when companies retain us for that work."

Right's business has picked up in the last six months, he said, and "I would anticipate it continuing in 2008."

Even so, the situation is not dire - yet. Clapp tracks an internal statistic known as Landing Time. That's Right's measure of how long it takes an unemployed person to find a similar job at a comparable pay rate.

The Labor Department also measures that statistic, although it doesn't require the job, or the pay, to be similar. Median length of unemployment is now 8.4 weeks, up a week from a year ago.

Right's average is five months. "That has not lengthened significantly at this point," Clapp said.

So far, Dodds isn't seeing the types of people who come in when the economy tanks. But he expects he will.

Then, Dodds will be ready, once again, to fight for extended unemployment benefits.

And maybe this recession will provide an impetus for change in health coverage, he said. Recessions make "a lot of people who were immune to poverty worry about the problems of the poor and the lower class."


Hardship

A glance at how the slowing economy has affected

the labor market in the last year. Figures are seasonally adjusted.

More jobless people have quit looking because they are discouraged about their prospects for finding work:

December 2006: 274,000

December 2007: 363,000

The median time to find a new job has lengthened:

December 2006: 7.5 weeks

December 2007: 8.4 weeks

More people remain jobless after their 26 weeks

of unemployment benefits end:

December 2006: 16.3 percent

December 2007: 17.5 percent

The unemployment rate is particularly high among African Americans:

December 2006: 8.3 percent

December 2007: 9.0 percent

It also is high for the young, ages 16 to 19:

December 2006: 14.8 percent

December 2007: 17.1 percent

Hardest-hit are young African Americans,

ages 16 to 19:

December 2006: 25.4 percent

December 2007: 34.7 percent

SOURCE: Bureau of Labor Statistics


Contact staff writer Jane M. Von Bergen at 215-854-2769 or jvonbergen@phillynews.com.

Inquirer wire services contributed to this article.

 
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