Finally, a wave of new jobs approaching
From airlines to the factory floor, hiring starts to outweigh job losses.
NEW YORK — At last, an economic recovery with jobs.
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.
The expansion is slated to continue next year. "We are at the point that to sustain our growth, we need to hire some people," says Bob Marion, vice president of Human Resources.
Some of the hirees had actually been laid off in 1996 by Reynolds. "We've taken back almost everyone who was on layoff at this point," says Mr. Marion. "Now we're advertising, and with an unemployment rate of about 10 percent in the area, we're having no problem finding qualified people with a good attitude about work."
Another battered sector that's rehiring is the airline industry. United Airlines, despite its bankruptcy status, has hired 450 part-time workers in Denver, Los Angeles, and Chicago. Northwest Airlines says it will hire 200 workers for its reservation centers in Minnesota.
The improvement in the airline business has a wide ripple effect, from food suppliers to contractors who do maintenance. One of those beneficiaries is TIMCO, which stores and maintains commercial aircraft. The company performs major airframe work, basically stripping a plane down and checking for any problems.
"One of these checks can run into 30,000 man-hours of work," says Brian Sauer, vice president and general manager. The company, which has a facility in Goodyear, Ariz., currently employs about 445 people there, but by the end of the year anticipates a payroll of 600.
"We're hiring everyone from ground-service personnel and support staff to aircraft mechanics," says Mr. Sauer. "We're getting a lot of interest from people who were laid off."
Some new jobs reflect a growing business confidence. Take Abuelo's Mexican Food Embassy Restaurants in Lubbock, Texas. It has decided this is a good time to expand from 13 restaurants to 16 by year's end - and to 22 by the end of 2004. Each new restaurant needs about 100 employees, from chefs to wait staff. "The majority shareholders believe in their concept and felt that if the economy has not bottomed out, at least it's close to bottom, so things can only get better over the next five years," says Bob Lin, chief operating officer.
Some employers are now trying to line up new workers because of the coming bulge in baby-boomer retirees. The Bureau of Labor Statistics estimates, for example, that there is a need for 35,000 automobile mechanics a year as many of the master mechanics pack up their tools and head for Florida. This has prompted Automotive Retailing Today, an industry group, to try to improve the image of someone who spends most of their day under the hood.
"The job is very computer-oriented," says Denise Patton-Pace, executive director of ART. "If you are efficient and smart and can keep several bays running at a time, you can probably make $50,000 to $100,000 or more a year."
Companies that are involved in outsourcing are also seeing opportunity. James Krouse of INPUT, a Reston, Va.-based market-research company, estimates state and local governments will be increasingly outsourcing their computer needs. Over the next five years, he projects a 17 percent compound growth for "managers, project consultants, just about the whole scope of IT."
This is certainly the experience at San Diego-based Kintera, which does computer work for nonprofit organizations. Over the past nine months, the 4-year-old company has added 40 employees, mostly in the San Diego area.
"We're hiring a lot of entry-level people just out of college," says Harry Gruber, the company's chief executive officer. "We're still looking for people with a non-profit and a sales background."