After a dry spell in job hunting since June, Erin Passabet was stunned to hear from four employers on one day in late November.
But only one call turned into a job offer. And the 48-year-old Mission resident turned it down. She believed that, with a wealth of professional and management experience, she could do better than a $12-an-hour, temp-to-hire customer service job.
Four years after the last recession officially ended, Americans like Passabet are still waiting for a big turnaround in the job market. For many, the jobs they’re being offered aren’t as good as ones they lost.
Even as the official job market report for November found better-than-expected job creation and a drop in the unemployment rate, most job market analysts want to see several more months of improvement before they can give unqualified words of cheer to the unemployed and underemployed.
At this point, except for workers in high-need positions — engineering and some information technology jobs, to name a few — there’s no sign the hiring spigots will flow in 2014.
Several situations bode poorly for widespread hiring growth:
• There’s uncertainty about whether the federal government will hit another budget impasse and force another partial shutdown.
• Employers fear higher costs associated with the Affordable Care Act so are keeping payrolls tight.
• Nobody’s sure yet if the Federal Reserve has fully exhausted its economic stimulus efforts.
• And, until the important fourth-quarter retail numbers come in, it is not clear whether the consumer-fueled economy has the boost it needs to pump up payrolls. Retail jobs grew by 471,000 in November, but that was 4.7 percent under the year-ago number.
Although some indicators show the economy has wind at its back, economists say the winds likely will remain too soft next year to blow the country fully out of the confounding “jobless recovery.”
As a result many job hunters, and particularly the long-term unemployed, can again expect continued challenges in 2014.
“We can’t say happy days are here again for the less-educated or entry-level,” said Frank Lenk, senior economist at the Mid-America Regional Council, who reports twice a year on the Kansas City job market.
Elizabeth Allen knows that for a fact. She leads a job seekers’ prayer and support group at the Church of the Resurrection in Overland Park, where she sees “high-level demand for talent in some industries — digital, high tech, IT, certain manufacturing with specific skill sets.” But, for most workers, “the broader trend is that the job market is just slogging on,” she said.
The most recent national measure of job creation and joblessness, issued Friday by the U.S. Bureau of Labor Statistics, suggested the “slog” is easing. Payroll employment grew by about 203,000 jobs and the unemployment rate sank to its lowest in five years, 7 percent.
This is the right direction to make up for the jobs that disappeared in the Great Recession. But the nation still is 1.3 million jobs short of the pre-recession number. And the faster pace of job growth has to be sustained.
Economist Heidi Shierholz at the Economic Policy Institute calculated that at the recent average job creation rate of 175,000 jobs a month, it will be 2020 before the nation returns to the labor market health it had before December 2007.
Net gains over the last few months have averaged 193,000, but something close to 300,000 is needed to restore the job market to “normal” with any speed. Meanwhile, published monthly job openings remain about a million shy of typical pre-recession months. A lot more high-quality jobs are needed.
In short, economists still are scratching their heads because the years since the Great Recession simply haven’t behaved like previous recoveries.
Slow economic prospects next year will be especially troubling for the long-term job hunters, who account for slightly more than one-third of the nation’s 10.9 million unemployed members of the labor force. At this point in previous recoveries that share was smaller.
These are the workers who have been jobless for 26 weeks or more and who have the most difficulty finding a job again. A report earlier this year by the Federal Reserve Bank of San Francisco said someone out of work for six months had a just 1 in 10 chance of becoming re-employed in any given month, compared to a newly jobless person with re-employment odds measured at 2 or 3 in 10.
Many of the long-term unemployed have simply given up, opting for retirement or disability benefits, if they can get them, or just putting their hunts on hold. By dropping out, they’ve helped plunge the labor force participation rate this year to all-time lows, between 62 and 63 percent of the working age populaiton.
They also contribute to an alternate measure of joblessness, which includes “discouraged” workers. Counting all of the long-term jobless and discouraged workers elevated November’s unofficial unemployment rate to 13.2 percent.
Next year, the long-term unemployed face a tougher problem beyond finding work. Because of the Great Recession’s severity, Congress had authorized a series of federal programs to provide extended unemployment benefits. But the extensions are scheduled to end Dec. 28 unless Congress acts — an outcome that so far has appeared unlikely given Republicans’ opposition.
Without extensions, about 1.3 million people will run out of unemployment benefits by the end of this year. Left to rely solely on regular state benefits, another 850,000 will exhaust their state benefits in the early months of next year.
Without jobs or unemployment checks, with planned cuts in food stamp benefits, without expanded Medicaid services in Kansas, Missouri and other states that fought the Affordable Care Act, the long-term unemployed will be in deeper financial trouble. Many have drained their savings already. They will rely increasingly on public and charitable assistance, made possible by fellow taxpayers and philanthropists.
The troubled job market
Nationally, there are three unemployed workers for each published job opening. That’s better than the more than 6 to 1 ratio four years ago. But it’s not enough.
Despite record corporate profits in many industries and record-high stock markets, Lenk said, employers remain exceedingly cautious about expanding payrolls. They’re hiring to fit exact needs, and they’re being picky.
“They’ve done more with less, so there’s no need to hire until business improves more,” Lenk said of employers. “They are meeting their fiduciary duty to stockholders.”
“I’m just not seeing a lot of movement,” said Maureen Reintzes, who manages an online networking group for job seekers in the Kansas City area. “And the people who are finding jobs are taking ones just to get by — not sustainable careers. They’re seasonal and part-time, not fulltime.…I don’t think anybody feels secure.”
Part-time, temporary and contract jobs constitute much of the current hiring. The tactics give employers a try-before-you-buy chance to evaluate workers and make it easier to dismiss workers that aren’t meeting expectations.
About 7.7 million workers in November were counted as part-time “for economic reasons,” or not by choice. Meanwhile, most job hunters still search for the increasingly rarer holy grail of employment — a fulltime job with benefits.
One big roadblock for job hunters, particularly those coveted full-time ones, continues to be a mismatch between what employers want and what job hunters bring to the table.
The manufacturing sector provides a case in point.
American factories last month reported their best production levels since 2011. Some lost jobs won’t be filled because of automation. But many existing job openings require more technical or specialized skills than the applicant pool has. Some of the jobs require more physical effort than applicants are willing or able to give. And pay levels, partly because of global competition, aren’t attractive enough for others.
Another re-employment problem: Some job hunters have found their hiring odds may not improve by going back to school or getting trained for a new occupation.
“I went back to school for computer certification,” said one 52-year-old applicant who asks not to be named to protect his job search. “So now I’m competing for jobs with people who’ve done that kind of work for years. Who do you think employers will pick?”
The answer to that question isn’t easy. Some employers prefer to hire workers who are new to the occupation who can be paid less and trained according to the organization’s preference. Some assume, wrong or right, that the skills of long-established workers are outdated or that they’re stuck in certain ways of doing things.
Yet another problem that isn’t likely to change in 2014 is that the pay levels of available jobs is poorer than the jobs that were lost.
Conveners of job loss support groups in the Kansas City area say the newly hired report taking jobs for an average of 30 percent less than they earned before.
“People who are landing jobs are making an adjustment in salaries (lower), and big hiring numbers are in contract or part-time jobs,” Allen, of the Church of the Resurrection group, said. “It’s causing a shift in mindset about what a job is. Most are taking what they can get because they’ve got to have something.”
But desperate job takers are finding they can’t live on the low wages or partial work weeks offered. Some are likely to continue to be found next year on protest lines, where labor unions and social justic gropus are leading drives to raise the minimum wage and improve the pay of fast food workers. Last Thursday, workers here and across the country rallied at fast food restaurants.
“It’s a classic problem of people working but not having enough money to support a household,” said Chris Kuehl, an economist with Armada Corporate Intelligence in Kansas City. “But the real issue is that the workers need a different set of skills to hold better jobs.”
Any bright spots?
Some economic observers, even those who are on the whole pessimistic, do point to signs of improvement in the economy and job market.
Auto sales in recent months have been the strongest since 2007, housing has stabilized, the construction and manufacturing sectors last week reported gains. Economic activity expanded more than previously estimated in the third quarter.
A survey released last month by Right Management, which provides outplacement and human resource consulting, found that more than 80 percent of workers say they intend to keep eyes wide open in 2014 for a job change — partly because they think there may be better jobs available.
Another positive: Employers for the last two years have increased hiring of new college graduates. It’s too early to know if 2013’s 7 percent increase over 2012 graduate-hiring numbers will be exceeded in 2014. But prospects appear strong for graduates in accounting, engineering, information technology, manufacturing, hospitality and social services.
Brad Justice, principal at Team Office, an office furniture store in Kansas City, has another way to measure job market health. He sees his business ramping up in technology training firms, in the mortage and lending industries, in advertising and marketing agencies, in the industrial sector, and in educational institutions.
“Things will be more stable,” Justice believes. “Business marched forward as it always has in spite of a government shutdown and health care reform. I think this experience will give owners more confidence to go ahead and pull the trigger on hiring and buying in 2014.”
Still, many indicators temper enthusiasm.
A survey of the people who do the hiring, issued Thursday by the Society for Human Resource Management, found that only about 3 in 10 employers are adding jobs this month, job vacancies are largely unchanged, and they still can’t find the key talent they need.
Connie Evans, president of the Association for Enterprise Opportunity, a trade association for “micro” businesses, said “the cost of making small loans is prohibitively high. So even if someone starts a company, it’s difficult to grow, to create jobs.”
Without job growth, the bedrock of the American economy, consumer confidence remains shaky. The Conference Board’s index of consumer confidence fell sharply in in October and then dropped again in November.
Similarly, Gallup in November found only small improvement after a record drop in October, reflecting the partial government shutdown that began Oct. 1. And a Zogby Analytics survey found that two-thirds of Americans fear another government shutdown next year.
So, if you’re looking for a job next year, the experts say, don’t expect private employers to suddenly pour accumulated profits into expanded payrolls. Don’t expect their fears about the costs of the Affordable Care Act to disappear or payroll paring to end.
Don’t plan on Uncle Sam or the Federal Reserve launching big labor-reviving programs. And don’t expect the dysfunction in Congress to disappear. Even if there’s not another budget impasse and partial government shutdown, the severe partisanship in Washington and the ongoing effects of sequester will impede, not foster, job growth.
As the calendar page prepares to turn, “The jury is still out on whether the job market will catch fire,” said economist Lenk.