Slow hiring likely to keep jobless rate high in 2011

1/17/2011

CHICAGO -- More than a year after the recession officially ended, millions of unemployed people continue hunting for jobs that don't exist and likely won't be there in 2011.

Although the number of jobs will continue to increase, economists say, companies are not hiring rapidly enough to bring down the unemployment rate, which is likely to hover above 9 percent.

"We are not going to see the kind of gains we should be seeing, given the losses we already endured," said Diane Swonk, chief economist at Mesirow Financial.

It's a grim outlook for people such as William Gardner, who has been unemployed for nearly two years. He and his wife have gotten by on his biweekly $820 unemployment check -- about $50,000 less a year than he used to make.

The couple have cut back, but some months, keeping current on their $870 mortgage requires going deeper into debt, he said.

"It's a numbers game," said Mr. Gardner, a former district sales manager at a beverage distribution firm. "I apply to 30 to 40 jobs a week. I just need one job. I got to keep going."

Last month, Mr. Gardner, 53, made it to the final round of interviews at a Detroit firm. A few days after he returned home, he was told the firm had decided to hire from within.

"What do you do? You kill yourself, or you rob a bank? ... You pray to God," he said.

In October, the United States had 3.4 million job openings, roughly one for every 4.4 unemployed workers, according to the U.S. Bureau of Labor Statistics. Ms. Swonk said that to produce a rapid decline in the unemployment rate, companies would need to hire more than 500,000 people a month, a big jump from the 39,000 jobs added in November.

"But nobody is holding their breath on that," she said, adding that a more realistic estimate puts job creation at between 150,000 and 250,000 a month.

The jobs being created tend to be concentrated in mid and low-wage industries, such as health care, food service, and retail, according to the National Employment Law Project, a policy and advocacy group.

"Those are also sectors where there are often real problems with job quality, not enough work benefits, not enough opportunities for promotion," said Annette Bernhardt, the project's policy codirector.

Earlier last year, about 76 percent of the jobs added by the private sector paid less than $15 per hour, the group said in a report. In contrast, nearly half the jobs lost in 2008-09 paid more than $17.43 per hour.

Some skilled workers have already sought refuge in low-wage industries, blocking people with lesser skills from entry-level jobs.

Darryl McClung, 50, an unemployed janitor, is an example. At the Chicago soup kitchen where he volunteers, he keeps a resume in his wallet and a binder in his backpack with letters and cards from businesses where he has applied. He wants to be ready when he gets the call, but he's been out of work for five months, and he's getting desperate.

"I have skills -- not on paper -- but I do have skills," said Mr. McClung.

Nearby, Kurt Jagade scrubbed a plastic tablecloth as other volunteers tidied up. In July, Jagade, 32, moved back to his native Chicago from North Carolina, where he had been making $10.64 an hour as a government worker fixing roads and driving dump trucks. His uncle said he could get him a factory job for $13 an hour, so Mr. Jagade jumped at the opportunity. Two days after he got to the city, the factory closed.

Since then, he said, he hasn't been able to land another job. With a wife and two children to support, he sought help from the state and volunteered at the soup kitchen in exchange for $360 a month in food stamps.

"I left what little I had, but I have nothing now," he said.