Will 2012 Be Rebound Year for U.S. Economy, Labor Market? 

 

The U.S. Labor Department reported Jan. 6, 2012, that employers added a net 200,000 jobs in December 2011, which helped reduce the unemployment rate to 8.5 percent—the lowest since February 2009. In fact, the unemployment rate dropped for four straight months, with the hiring gains capping a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hadn’t happened since April 2006.

For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent for the year, down from 9.6 percent in 2010.

Holiday Hiring Helped 

Seasonal hiring in retail nearly returned to pre-recession levels in 2011, as employment in the sector experienced a net gain of 718,500 over the final three months of the year, according to an analysis of employment data released by the U.S. Bureau of Labor Statistics (BLS). That marks a 14.5 percent improvement over the number of seasonal jobs added in 2010.

The analysis of nonseasonally adjusted data by global outplacement consultancy Challenger, Gray & Christmas, Inc. found that while October 2011 hiring was down from October 2010, strong job gains in November and December 2011 fueled the surge.

“Seasonal hiring was better than expected [in 2011], particularly since the recovery was stumbling a bit just as we were approaching the period when retailers make their hiring decisions,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

Retail sales in December 2011 were up about 3.4 percent from December 2010, according to a survey of 22 major chains by Thomson Reuters. In addition, online sales were up 15 percent from a year earlier, which helped create jobs outside of retail, as shipping firms like UPS and FedEx bulked up their rosters to help fulfill all of the online orders.

2012 Picture Could Be Worse

Several retail experts, however, have predicted that sales could be particularly weak in January 2012 as Americans try to recover from holiday spending, said Challenger. Over the past several years, retailers have cut more workers in the months of January and February than they hired in the preceding three months.

"We would not read too much into the rebound in initial jobless claims," said Paul Dales, an economist at Capital Economics, in a clients’ note reported by the Huffington Post Jan. 12, 2012. "There (are) always problems in seasonally adjusting the weekly data around the turn of the year. As it stands at the moment, the trend in claims remains downwards."

So what can we expect in 2012? David Wilkins, vice president of research at talent management firm Taleo, has written a blog post titled U.S. Labor Numbers for 2011: A Dream Deferred, which takes a look at the job market in 2011 and examines what we can learn from it going into 2012. He writes:

“When numbers come out saying 325,000 jobs were added, most people are quick to say things are looking up; but when all factors are considered—seasonal hiring, sustainability, people who have opted out of the job search—that’s not necessarily the case. Based on the December [2011] numbers, average job creation for [2011] will likely come in around 130,000 jobs added per month. The rate of jobs growth required to support an increasing population is around 120,000 jobs per month. What this means is that, for the year, the economy grew enough to put just 120,000 people back to work. 

“While many people are using the last few jobs reports and lack of a European meltdown as proof points for 2012 optimism, based on the 2011 numbers, the jury is still out. We have stopped sinking but are bailing water at rates that are only just slightly ahead of the rain coming in. Given the current pace of job creation, it will take decades to get us back into reasonable unemployment territory.” 

Outlook: Slow Going

While job growth was picking up some steam in the U.S., said Gad Levanon, director of Macroeconomic Research at The Conference Board, the country’s economic activity probably won’t sustain rapid job growth through the first half of 2012, he said in a statement accompanying the release of the organization’s latest Employment Trends Index results.

The Conference Board’s Employment Trends Index “has been signaling this growth for three straight months now. However, [BLS’ Jan. 6, 2012] employment data—with a reported gain of 200,000 jobs in December [2011]—likely overstates the trend. We don’t expect overall economic activity to grow fast enough to sustain such rapid job gains throughout the first half of 2012.”

But an online survey of more than 600 senior executives and HR professionals at more than 600 firms across the U.S. representing government, nonprofit, public and private organizations that was conducted in November and December 2011 by talent and career management firm Right Management shows that few U.S. employers that responded predict significant staff cutbacks in 2012. Just 3 percent of respondents expect significant cutbacks or restructurings, and two-thirds expect almost none.

“Layoffs had already begun to decline during 2011, a development most employers saw coming [in 2010] and which was reflected in [2011’s] trend survey,” said Right Management’s Bram Lowsky, group executive vice president for the Americas in a statement about the survey results. “A year ago 52 percent of employers predicted virtually no restructurings in 2011. Nevertheless, lean staffing is now the norm at most organizations.”

Asked about expected hiring in 2012, respondents were slightly optimistic, observed Lowsky. “In the latest findings, one in five employers predicts stepped-up hiring in order to drive strategic growth. The majority, 58 percent, predicted just nominal hiring on an as needed basis, and 21 percent predicted more hiring in order to fill existing gaps in the organization.”

According to Lowsky, organizational staffing trends will mirror overall U.S. economic trends. “We’ll see employers push growth but with fewer resources, trying to make do with what they have. … Organizations will need to be effective with their talent strategies to nurture employee engagement, productivity and performance with their streamlined workforces.”

President Pushes ‘Insourcing’ Incentives

At an “Insourcing American Jobs” forum held at the White House on Jan. 11, 2012, Obama called on companies to invest in the U.S. The forum focused on the increasing trend of insourcing, where companies are bringing jobs back to the United States and making additional investments in the country.

The president was expected to put forward ways to encourage American companies to seize this opportunity to increase investment in the U.S. and bring jobs back. In addition, he will put forth tax proposals designed to reward companies that choose to invest or bring back jobs to the United States and to eliminate tax advantages for companies moving jobs overseas.

Said Obama: “Today I am meeting with companies choosing to invest in the one country with the most productive workers, best universities and most creative and innovative entrepreneurs in the world: the United States of America. That’s exactly the kind of commitment to country we need, especially now, at this make-or-break moment for the middle class. And I’m calling on those businesses that haven’t brought jobs back to take this opportunity to get the American people back to work. That’s how we’ll rebuild an economy where hard work pays off and responsibility is rewarded.”

In conjunction with the forum, the White House released a report that details the insourcing trend and how companies increasingly are choosing to invest in the U.S.

While other countries often advocate at the national level for business investment, the United States has historically left this activity to the states. Obama launched the SelectUSA program in 2011 to address this critical gap, creating the first federal program to promote and facilitate U.S. investment in partnership with the states. He is expected to propose in his 2013 budget an additional $12 million in resources to grow the program.

As a part of the administration’s efforts to spur employment opportunities, the administration announced several steps it has taken to incentivize insourcing:

Increasing use of the Small Business Administration’s International Trade Loan program to support small businesses seeking to insource.

Launching a partnership between the U.S. Commerce and State departments to promote investment in 10 priority countries through the Foreign Commercial Service supported by the U.S. embassies.

Increasing support for states’ efforts to promote investment through federal officials in Export Assistance Centers in more than 100 cities.

Theresa Minton-Eversole is an online editor/manager for SHRM.

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