It's An Employers' Market: Job Losses Grow
December job-loss data are the worst since the 1930s. But don't expect this to turn into another Great Depression.
American pink slips continue to mount this winter, with the national unemployment rate reaching a postwar high of 7.2 percent for the month of December, according to the U.S. Department of Labor. Job losses reached 2.6 million in 2008--the most since 1945--and some experts predicted that 2009 would bring the worst unemployment rate since the Great Depression of the 1930s.
In New York, North Carolina and Ohio this week, unemployment claims hit a snag when websites crashed and phone lines faltered under a barrage of requests for relief. December and January losses are fed by some of the nation's biggest corporations, including AT&T, DuPont, Walgreen and Alcoa.
Sectors hard hit in the labor department's just-released end-of-2008 report include construction, which has dropped 899,000 total jobs since 2006; factory jobs, down 791,000 for 2008; temp work, down 490,000 positions last year; and retail, which saw 522,000 fewer gigs in '08. The few employment bright spots included education, government and healthcare, the latter of which was up 32,000 positions in December alone.
"The jobs market is still in a freefall," said Global Insight chief economist Nariman Behravesh in a statement. His firm predicts that the unemployment rate will continue to climb to as high as 9.5 percent in 2009 if a federal stimulus package doesn't stem the flow of job losses.
Some experts suggest that the percentage of unemployed workers is actually in the double digits when the marginally employed and perpetually unemployed are counted. "We think it's going to be a nasty employment situation in 2009," says Kevin Feltes, associate director of the Jerome Levy Forecasting Center.
"Based on the terrible unemployment numbers today," he says, "we think 10 percent is entirely likely and even 11 percent is possible."
Is there any good news? Tig Gilliam, North American CEO of the employment solutions giant Adecco, says there's still demand for highly skilled workers in such sectors as finance, accounting, information technology and engineering, the latter two seeing 1,400 openings listed today at Adecco. "For the higher qualifying, higher-education-level jobs, there's still a scarcity of qualified resources," Gilliam says.
What's more, Jason Zickerman, CEO and president of business owners' peer group The Alternative Board, says entrepreneurs who are considering cutting their work forces can find creative ways to keep their people and still save money. He suggests implementing a four-day work week, extra weeks of unpaid vacation, and partial- or no-pay education sabbaticals.
"When your employees see you're doing everything in your power to avoid layoffs, it promotes allegiance," Zickerman says. "Challenge your team to find cost savings. If you make your employees feel that they have some control over their destiny, you will get everything they have."
Meanwhile, Feltes predicts that while '09 will be a tough year economically, there will be light at the end of the tunnel starting in 2010.
"Fortunately we are, in our minds, entering a contained depression," Feltes says. "Unlike in the 1930s, there are some critical differences: The federal government is a lot larger relative to the size of the economy, about 20 percent of GDP (gross domestic product). The government has a lot of power to pump up the economy. The other major difference is that the government is much more able to contain the financial wreckage now than then with the Central Bank and regulatory agencies."
And, for entrepreneurs, Feltes notes that the age-old problem of finding labor, especially in the service industry, won't be as difficult. "There will be a lot more workers available, and that will be one bright side," he says.
"We don't think this is the end of the world."
Entrepreneur Editors' Picks
Kale Was a Garnish Before This Creative Genius Made It Famous. Here's How She Did It — and What She's Planning Next.
Telling Your Brand Story Is Crucial. 4 Steps to Ensure That It Resonates.
This Baker Was Told Not to Speak Spanish With Colleagues, So She Started Her Own Cake Company That Values Employees Just as Much as Customers
Improving Yourself Takes 9.6 Minutes of Work Each Day
Meet the Women Behind Some of McDonald's Most Iconic (and Essential) Ingredients — and How They're Setting New Standards
Remote Work Shouldn't Be Up for Debate
Employees Are Over Foosball Tables and Free Snacks. Your Company Culture Needs This Instead.