Tag Archives: job market

Optimism From the Job Cut King

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Forgive the poor E.F. Hutton pun, but when John Challenger talks, people generally pay attention. The Chicago-based Challenger, Gray & Christmas firm is viewed as the guru of job market reports and trends — and John Challenger is its leader.

Usually quick to report on employment cuts and leadership exits, Challenger is out with an analysis that says the economic recovery is no longer "jobless." Here’s some of what he offered:

“The pessimism about the job market is evidenced in latest readings on consumer confidence by the Conference Board and the University of Michigan, both of which declined in March. However, while some might perceive that the job market is standing still, it has actually made significant strides since the end of the recession in several areas, including planned layoffs, private-sector payrolls, unemployment and hiring,” noted Challenger.

In the Challenger analysis of government data it found that, much like the previous two recessions, private-sector payrolls continued to contract following the declared end of the recession. From July 2009 through February 2010, private payrolls experienced a net decline of nearly 1.2 million jobs, according to the latest figures from the Bureau of Labor Statistics’ survey of employers. Since February 2010, however, private sector employment has seen net job gains for 13 consecutive months, adding a total of 1.8 million jobs. As of March, there were approximately 108.6 million Americans on private sector payrolls, which is about 93 percent of the pre-recession high of 115.6 million.

Employment is also growing in the Bureau of Labor Statistics’ household survey, which is used to establish the unemployment rate.  Similar to private payrolls, overall employment continued to decline during the six-month period following the end of the recession. However, over the past 15 months, there have been 10 months of gains for a net increase of 1.9 million newly employed Americans.

Meanwhile, the unemployment rate, which initially continued to rise for four months following the June 2009 end of the recession to a high of 10.1 percent in October 2009, fell to a 24-month low of 8.8 percent in March.  By contrast, unemployment peaked 19 months after the end of the 2001 recession and, following the recession that ended in March 1991, unemployment continued to rise for 15 months.

“There is no reason to think that these positive trends will not continue, even with the threat of higher fuel costs. Based on our tracking of planned job-cut announcements, which tend to be a forward-looking indicator of how employers see future business conditions, there are no signs of sudden reversal of fortune,” said Challenger.

Monthly job-cut announcements are at their lowest levels since the late 1990s.  In fact, the 130,749 job cuts announced between January and March represents the lowest first-quarter total since 1995.

At the same time, planned hiring announced in the first quarter totaled 112,942, which is more than double the 53,675 planned hires announced during the same period a year ago. 

Job Market Not All Bad News for Gen Y

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Syndicated career advice blogger/author Penelope Trunk, whose Twitter feed is actually pretty amusing and insightful, offers her thoughts via bnet.com about why Generation Y is right to be optimistic about the future. Some interesting and encouraging words for those seeking work:

We read about how scared young people are, and how desperate they are for a job, but we don’t hear the other side: That young people are optimistic about their careers, their future and are doing well in the American economy. Underreported stories: Washington, D.C. is the easiest city to find a job, and young people love government jobs; farming is in a renaissance, and the local food movement is teeming with young people; healthcare and teaching are both booming; and while service-oriented work is hated by the top-down, rank-oriented mindset of baby boomers, Gen Y is much more collaborative and happy to work in the service sector.

Here’s another bit of evidence of Gen Y optimism: The Wall Street Journal reports that applications to business schools are down 2%. That’s a small decrease, but business school applications historically go up in a bad economy, and they stay up until things get good again. That applications are down is evidence that young people do not perceive the job market as terrible.

As the country moves to a knowledge-based economy, most Americans can no longer expect to earn more than the generation before them. In fact, Don Peck, writing in the Atlantic, explains that as the economy recovers it will look permanently different. This will not be a recovery where the skills of older people come back into demand; the jobs that emerge will be in new sectors, and the financial expectations of employees will permanently shift because of the new realities…

Additionally, the demographics of the U.S. workplace favor Generation Y: As baby boomers retire, Gen X, which is only half the size of Baby Boomers, cannot replace them. So there will be a significant worker shortage in the U.S. by 2015. Generation y will benefit from the worker shortage. They will get higher paying jobs faster, they will go up the corporate ladder faster, and they will be able to remake the workplace in their own image without much resistance.

You can call Gen Y entitled, or delusional, or self-centered, but Gen Y has a gift for reframing situations in a positive light. This is a gift that stems from the parents of gen Y being obsessed with self-esteem. Self-esteem breeds optimism, and this optimism makes Gen Y emotionally able to fend off the recession better than other generations.

Experts Predict Slow Jobs Recovery for 2010

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When it comes to the employment outlook, the private sector name to know is Challenger, Gray & Christmas. The Chicago-based outplacement and consulting firm offers this look ahead for the 2010 job market. The overview: positive news but tempered with a great deal of caution.

After starting the year with the heaviest downsizing in nearly a decade, the number of announced job cuts declined dramatically in the second half of 2009, providing hope for an eventual job-market turnaround.  The turnaround should become more evident in 2010, as job creation finally begins to outpace job losses.

However, while hiring is expected to accelerate in the new year, unemployment could remain stubbornly high, as millions of Americans who abandoned the job search out of frustration – and, therefore, not counted among the unemployed – reenter the labor pool. 

The economy is just beginning to pull out of the worst economic downturn in decades.  Since the recession began in December 2007, employers have announced nearly 2.5 million job cuts.  The heaviest downsizing occurred between July 2008 and June 2009, with more than 1.6 million job cuts announced.

Job cuts appear to have peaked in January 2009, reaching 241,729, the highest monthly total since January 2002.  In the months to follow, announced layoffs steadily declined, but the monthly average remained above 130,000 through the first half of the year.  Since July 1, however, monthly job-cut announcements have averaged about 69,000.  In November, job cuts fell to 50,349, the lowest monthly total since December 2007. 

“The end of the year is typically when we see a surge in layoff activity.  The fact that job cuts continued to decline in the fourth quarter is a good sign that the job market has truly started the recovery process.  Unfortunately, the recovery process is slow, so it could be several months or even years before unemployment returns to pre-recession levels,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

There were approximately 15.4 million unemployed Americans in November, up from 7.2 million in November 2007, just before the recession began.  In addition to the unemployed, there were 6.0 million Americans in November who want a job but were not considered part of the labor force because they had not sought employment for at least four weeks.  That figure is up from 4.2 million in November 2007.

According to Challenger, some of the areas that will begin to see renewed job creation in the new year include health care, information technology, government, financial services and energy.