Finally, a wave of new jobs approaching
From airlines to the factory floor, hiring starts to outweigh job losses.
At last, an economic recovery with jobs.Skip to next paragraph
Subscribe Today to the Monitor
A software engineer in San Diego finds a job only two months after being laid off. An aluminum company in Muscle Shoals, Ala., is recalling workers, some laid off as long ago as 1996. And a budding restaurant chain based in Lubbock, Texas, will be hiring 900 chefs, waiters, and dishwashers over the next 14 months.
These are just some of the ways an economy - now described by even some experts as sizzling - is finally creating jobs faster than they are lost.
Economists expect that evidence of this change will start to show up over the coming months as up to 150,000 new jobs are created each month. Hiring appears to be happening across the board: from airlines who are recalling laid-off workers to manufacturers who can no longer meet orders simply by turning on new machines. Even Silicon Valley has "help wanted" signs.
"All signs are pointing to more jobs," says Sung Won Sohn, chief economist at Wells Fargo Banks in Minneapolis. "We are at the point where companies need more people to meet the increase in demand in their businesses."
This shift has important economic ramifications. More jobs will keep consumers spending instead of worrying about layoffs. It will also give businesses confidence that the long-anticipated economic recovery has some depth to it. And it comes at a time when the economy needs help sustaining the stimulative effect of both tax cuts and lower interest rates, which has been waning.
"A resumption of job gains more than adequately fills the gap," says Richard DeKaser, chief economist at National City Corp. in Cleveland. "When you have income realized through work, about 98 percent of it is out the door as soon as it's earned."
The hiring spurt could also have important political ramifications, particularly as the 2004 presidential race nears. A better employment picture could relieve some of the criticism directed at the Bush administration, and it could make Democrats rethink their campaign strategy.
But while the economy will be creating new jobs, economists warn that the improvement won't show up initially in the widely watched unemployment rate. In fact, the rate - currently at 6.1 percent - might rise over the coming months as discouraged workers start looking for work again. "The rise in the unemployment rate is actually a good sign in the early stages of a recovery," says Mr. Sohn. "The rate shouldn't start dropping in earnest until 2004."
Still, there have been incipient signs for weeks that improvement is on the way. Initial unemployment claims have been trending down, including last week. Last month, the Department of Labor reported a gain of 57,000 jobs, the first net increase in eight months.
In surveys, businesses say they intend to hire more workers. This is supported by anecdotal evidence. IBM says it will create 10,000 new jobs next year in consulting and software. Union Pacific, the nation's largest railroad, will add 1,000 conductors and engineers before the end of the year. And Hyundai, the Korean vehicle company, is building a 400-employee tech center outside of Ann Arbor, Mich.
In addition, reports of new layoffs are slowing down. "The layoffs and working out of the bubble from the excesses of the 1990s is almost finished," says John Challenger, whose outplacement firm, Challenger, Gray & Christmas, tracks downsizings.
In fact, many companies have scaled down so much that they need to start to rebuild their workforces. That's what is happening at a former Reynolds Metals plant, now called Wise Alloys in Muscle Shoals, Ala. Over the past four years, the plant, which produces aluminum sheeting for the food and beverage industry, reduced its workforce by about 33 percent. Now, it's adding crane operators, machinists, electricians, and some professionals.