U.S. Job Losses not as Bad as Expected, but How Long Will It Last?

Ann All

Though it's hard to see how a loss of 20,000 jobs could be a good thing, that's largely how the media portrayed it Friday after the Labor Department released its employment statistics for April. The news does sound downright positive considering that most economists expected job losses to be closer to 80,000.


The numbers shook out to favor industries providing services, reports The New York Times, while those selling tangible goods generally took a hit. Among the losers: construction (61,000 jobs), manufacturing (46,000) and retail (26,800). Industries adding jobs included health care (37,000), restaurants and bars (18,000) and professional services (39,000). Experts believe the increase in the latter category, which includes accountants, architects and management consultants, may be an anomaly, however.


Many experts believe that companies with already-lean workforces are focusing more on cost control than layoffs. That strategy will likely continue if consumers increase their spending in coming months. If that doesn't happen, however, companies will likely begin shedding more jobs. Cutting workers appears to be a key strategy for many companies. The number of folks working part time because of business declines or out of failure to find full-time work grew to 5.2 million in April from 4.9 million in March. In percentage terms, employees working part time involuntarily climbed to the highest level since 1995, notes the article.


One company cited in the story, Nebraska's Behlen Mfg. Company, has thus far avoided layoffs by building inventory and shifting workers to divisions that produce goods for export. But if economic conditions don't improve soon, 50 of its 1,100 jobs will be at risk, says the company's chairman.


As often happens in times of economic distress, hiring haspicked up in the public sector, which added 76,800 jobs in 2008's first quarter. That's the biggest jump since the first quarter of 2002, when many government agencies staffed up following the Sept. 11, 2001 terrrorist attacks, reports USA Today.


This may not last, however, as state governments wrestle with economic problems of their own. Ten states have already announced hiring freezes, according to an Associated Press story in the International Herald Tribune, and more could follow as 27 states face budget shortfalls. Says the executive director of the National Association of State Budget Officers:

I don't think we've seen the most painful cuts we're going to see.

So what about tech jobs? Are they remaining relatively impervious to these problems, as I blogged back in March? States with technology-centric economies are faring somewhat better than their counterparts, as this Boston.com story illustrates.


Though Massachusetts was hit especially hard by the dot-com bust in the early 1990s, the state's economy is now growing about five times faster than the national norm. The state added 4,600 jobs in 2008's first quarter, and the tech sector is accounting for much of the hiring. Employment in professional, scientific, and technical services grew nearly 4 percent over the past year, compared to less than 1 percent for total state employment. Software employment rose 5 percent.


Several economists interviewed in the article agree that the state's booming export business and global demand for its medical and technology products is helping Massachusetts offset losses in consumer-oriented markets like housing.


But all isn't rosy in the tech sector. Sun Microsystems says it expects to cut up to 2,500 jobs after announcing an unexpected $34 million loss in the third quarter. Sun CEO Jonathan Schwartz attributed the loss to U.S. companies delaying big-ticket tech purchases as they wait to see how long the economic downturn will last. Interestingly, Sun was one of the companies I mentioned in a blog post earlier this year about how companies with lots of multi-national clients are better positioned to withstand a slowing economy than peers who serve mostly U.S. customers. Sun turned in a strong financial performance in 2007''s fourth quarter, thanks largely to its sales in India, China and Eastern Europe.

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