Help Not Wantedby
What does it feel like to have an economic recovery without new jobs?
That's what Americans may be finding out. Since July, nonfarm payrolls have shrunk by 30,000. Take out hiring in health care, and the rest of the economy has lost almost 200,000 jobs. And the next few months don't look much better. Many economists see only a weak rebound in employment in the first half of 1992 (chart) -- one that won't be enough to bring down the unemployment rate.
What's worse, the layoffs, downsizings, and "involuntary separations" that made 1991 ghastly for many workers will continue into 1992. Many companies that have already cut jobs aren't through chopping heads. And fresh cutbacks seem to be announced almost every day. On Dec. 11, for instance, Xerox Corp. disclosed plans for reducing its work force by 2,500 by mid-1992. On the same day, TRW Inc. announced impending job cuts of 2,500 workers, in addition to divesting businesses employing 7,500 more. And IBM intends to cut 20,000 positions over the next year, the sixth such major job-cutting program at Big Blue since 1987.
TOO PRUDENT? After the last recession ended, in November, 1982, many companies waited only a few months before starting to add workers again. But this time, most businesses intend to hold off much longer, until the recovery is stronger. Help-wanted ads are down everywhere, and executive and professional search firms report only a slight pickup in activity. Says Christopher C. Cole, vice-president for strategy and business development at toolmaker Cincinnati Milacron Inc.: "I do not look for us to be increasing employment next year -- not until we see our customers in a lot stronger position than they are now."
That may well be a prudent strategy for Milacron. But too much caution on the part of employers could lead the economy into a vicious downward spiral. When companies don't see an increase in demand, they will tighten their belts another notch. The fear of more layoffs could terrify workers into pulling purse strings tighter. Indeed, one measure of consumer confidence, compiled by Plog Research, a Los Angeles market researcher, plunged from 44.6 in October to 26.3 in November.
Not all parts of the labor market are shrinking. Engineers and technicians are still in demand, depending on their specialty, even at companies that otherwise are paring workers. Environmental companies intend to hire in the first half of 1992, reports Management Recruiters International Inc., a Cleveland search firm. Health care, too, is still a source of jobs. For example, Baxter International Inc., a health-care-goods company in Deerfield, Ill., hired hundreds of people this year and plans to add more in 1992. And Hyatt Hotels Corp., which laid off 5,000 people in 1991, expects to open three hotels and hire 1,500 new workers in the coming year, says President Darryl Hartley-Leonard.
But these companies are the exceptions in a recovery that has proved distressing for workers. When the 1981-82 recession ended, hiring picked up in some industries, such as finance and business services, almost immediately. Within six months, almost every industry was expanding vigorously, and the economy had added almost 900,000 jobs.
STANDSTILL. This time, almost no industry shows growth. The bloated banking, real estate, and retailing fields are still contracting painfully. Continuing state and local budget deficits mean more reductions in government jobs. Defense cuts are still taking their toll across the country. And after a mild rebound, not a single manufacturing industry has added many workers since summer.
Moreover, if spending falters and the economy starts to contract, retailers and manufacturers might find themselves with mountains of excess inventory. "If Christmas sales come through poorly," warns A. Gary Shilling, an economic consultant, "I think we will see more big layoffs early in 1992." Certainly, many companies intend to keep cutting costs -- and jobs -- even if the economy continues to recover. On Dec. 9, Denver's U. S. West Inc. unveiled plans to slash about 6,000 positions, some 9% of its total work force, over the next three years. And citing a bleak outlook for farm and construction equipment, Tenneco Inc. announced it intends to pare 4,000 jobs from its J. I. Case subsidiary by the end of 1992.
Computer companies, too, are still trying to slim down to meet the new realities of the marketplace. Besides IBM, Unisys Corp., which announced cuts in July, has eliminated 12,000 jobs, by layoffs or divestitures, since the beginning of this year and has 6,000 more to go in 1992. Analysts expect that minicomputer maker Digital Equipment Corp. will cut 6,000 jobs in the first half of 1992, in addition to the 5,700 eliminated through Sept. 30.
And corporations such as Du Pont Co. are cutting jobs to remain globally competitive. The company has eliminated 1,700 jobs out of an announced 5,500 so far, with more cuts planned for next year. Du Pont workers were recently unnerved by news of another scheme in the works to bolster the company's bottom line by as much as $2 billion over the next five years, in part by paring "unnecessary" jobs.
NO RELIEF. The shrinking defense industry is sure to bring many pink slips to workers in 1992. With business weak for both military and commercial aircraft, McDonnell Douglas Corp. expects to fire up to 6,000 employees over the next 18 months. An additional 1,700 missile and helicopter workers also will get the ax. Even mighty Boeing Co., which expects to lose about 2,500 jobs because of canceled missile programs, will have to lay off excess workers. About 7,600 additional Boeing jobs could be lost if Congress cancels the B-2 stealth bomber.
Beyond defense, most companies expect that sales will eventually pick up. Still, even new orders may not bring jobs back. In September, General Electric Aerospace reported plans to cut employment by almost 20% at its East Windsor (N. J.) plant by mid-1992. Then, on Dec. 2, GE won a $145 million contract to build two satellites for South Korea at that same plant. Good news, right? Yes, but the company doesn't plan to hire new workers. And the new order won't even boost U. S. employment at GE's contractors, since the three key suppliers are foreign.
Production of goods and services may still be able to grow again without a rebound in employment. If all the cutbacks make companies more efficient, higher productivity could mean economic growth without more jobs. Yet for millions who have lost their jobs, it would feel as if the recession never ended.