Shouldn't the jobs machine be cranking by now?
Economic conditions are better than they were, but job openings remain below where they were when the recession began.
Shouldn't the jobs machine be cranking by now?
At this point in the economic recovery, the mythical “jobs machine” (standing near the imaginary “money tree”) ought to be stamping out shiny new positions for a ready-to-work citizenry.
After all, corporate profits, pegged at $1.66 trillion as of Sept. 30 by the federal Bureau of Economic Analysis, have already exceeded their pre-recession peak. And new jobs always follow the rebuilding of profits. That’s what the oracles - I mean, economists - have foretold.
However, as we saw in last Friday’s employment report, the job market may not be sick, but it isn’t well.
Perhaps the 39,000 private-sector jobs that the Bureau of Labor Statistics reported were created in November will be revised higher next month. It’s a volatile statistic that gets adjusted several times in a year.
Even if that number were to be doubled, it would still be below the 125,000 to 150,000 jobs that economists say employers need to create per month simply to keep pace with the number of Americans trying to enter the workforce.
You might wonder how so few jobs could have been created in November when, according to another set of BLS statistics released Tuesday, there were 3.36 million job openings at the end of October.
Well, there are always job openings even in the worst of times. The recession ended in June 2009 and the number of job openings bottomed out the following month at 2.34 million jobs.
So the good news is that there are one million more jobs available now than in mid-2009. But that level is also one million jobs below the 4.4 million openings for jobs when the recession began in December 2007.
The reason economists keep telling us that the U.S. economy is close to creating lots of jobs can be seen in the BLS data on hires and separations. The Job Openings and Labor Turnover survey counted 4.2 million hires by the private sector during October, up 9 percent from June 2009.
At the other end of job spectrum, employers reported 4.05 million separations for October, the fourth straight monthly decline. (Federal stat keepers say separations include quitting, layoffs and other discharges, and retirements.)
Quitting can be seen as a bullish trend because it measures workers’ willingness or ability to change jobs. Two million people quit in October. The all-time high recorded for quitting was 3.2 million people in November 2006, when the streets were paved with jobs.
As for layoffs and discharges, they peaked at 2.6 million in January 2009 and have drifted lower to 1.7 million in October.
There is no getting around that layoffs generate larger headlines than hiring. But over the last week or so, the Philadelphia area has seen a spate of corporate announcements that involve job cuts.
On Tuesday, West Pharmaceutical Services Inc. said it intended to close its plastic components manufacturing plant in Montgomery, which is near Williamsport in central Pennsylvania. It will mean the loss of 170 jobs.
The Lionville-based company also said it will downsize operations in Cornwall in the United Kingdom, eliminating 150 full-time jobs over the next two years.
Pharmaceutical wholesaler Express Scripts Inc. on Dec. 1 said it now plans to close its Street Road operations in Bensalem as of Feb. 1, eliminating 535 jobs. A separate Express Scripts site on Marshall Lane in Bensalem is set to close on Dec. 16, cutting 365 jobs.
Oil refiner and marketer Sunoco Inc., which agreed Dec. 2 to sell its Toledo, Ohio, refinery to PBF Energy, said it will be cutting its corporate staff by 175 people with most of those cuts coming in Philadelphia.
The Clarion Hotel Park Ridge in King of Prussia last month said it would close as of Jan. 25, resulting in the loss of fewer than 100 jobs. And Trump Entertainment Resorts Inc., which recently emerged from bankruptcy, cut 250 jobs at its three Atlantic City casinos.
However, I think it would be a mistake to view this as a wave of new layoffs by business. Each public company had its own reasons for shedding jobs, but none reflected fear of an economic downturn, as was common two years ago.
That same cannot be said for the public sector, which has not engaged in massive layoffs, thanks to aid from various federal stimulus programs. That protection is nearly gone. Last week, the perpetually broke City of Camden announced plans to lay off as many as 383 unionized municipal workers as of Jan. 18.
Given the growing challenges at all levels of government, layoffs in the public sector may generate lots of headlines in 2011, unless the private-sector jobs machine kicks into high gear and starts rumbling, rather than fumbling.