A recent job fair in Tucson attracted more than 5,000 people.
When it comes to the U.S. job market, there are few places to turn.
Every U.S. state and 95 percent of the nation’s metropolitan areas will end 2009 with fewer jobs than they started with, while only two sectors — education and health services and government — will add workers.
That’s the grim prediction from economic consulting firm Moody’s Economy.com that illustrates how the recession is touching Americans in every corner of the country.
And it means that, unlike in prior downturns, most people who lose their jobs can’t simply pick up and move to find work, an issue compounded by the housing crisis. Such an unprecedented lack of mobility will make the downturn longer and deeper, economists at Moody’s Economy.com, Wachovia and others say.
“There really is nowhere to hide in this economy,” Moody’s Economy.com chief economist Mark Zandi says.
“If you lose your job, it’s not clear where you should move to find one or even what training or education you need to retool yourself,” he says. “The hallmark of the current downturn is that it is so broad-based across industries, occupations and regions of this economy.”
Workers in some states certainly will be better off than others. Employers in six states — Washington, Texas, North Dakota, Colorado, New Mexico and Nebraska — and Washington, D.C., are expected to shed less than 1 percent of their workers this year.
At the same time, Ohio, Missouri, Florida, Connecticut, Hawaii and Michigan are forecast to lose the greatest proportions of their states’ jobs. Michigan, hit hard by a rapid decline in the U.S. automotive industry, is expected to shed more than 175,000 jobs this year, a 4.3 percent decline, according to Moody’s Economy.com.
Nationwide, employers are expected to cut 2.7 million jobs this year after eliminating more than 2 million positions in 2008, according to Moody’s Economy.com.
The year is off to a bad start.
Firms cut 598,000 jobs in January, the most since 1974, the Labor Department said Friday. The unemployment rate rose to 7.6 percent, the highest in more than 16 years.
More than 11.6 million people were unemployed last month, up 54 percent from a year earlier and the most since December 1982.
Including people who were working part time even though they wanted full-time work, and those who had given up on finding a job, the rate of “underemployment” was 13.9 percent in January, up from 9 percent a year earlier and the highest since the Labor Department began tracking the number in 1994.
This month isn’t looking much better. Already, household names such as Macy’s, Electronic Arts and PNC Financial Services have announced thousands more layoffs.
‘I’m very scared’
Graphic designer Fred Jung, 35, was laid off on Jan. 22 from his job in the marketing department at New York Life Investment Management. He was given severance pay, which is helping to supplement his wife’s salary as a labor-and-delivery nurse.
But Jung, a father of a 2-year-old girl and a 4-year-old boy with autism, says he sees little hope in this job market, much less than when he was laid off during the 2001 recession.
When he lost his job then, Jung was able to piece together freelance assignments and moved from the Philadelphia area to northern New Jersey, where he saw better job opportunities. He got permanent work with New York Life in 2003.
“I’m very scared, a little depressed. Worried a lot,” says Jung of Fort Lee, N.J., who also notes that in 2001 he wasn’t a father, which means added pressure.
“I don’t know where I am going to find a job. And I really need one.”
On the other side of the country, Dave Sitton of Tucson is digesting his recent layoff.
On Jan. 20, he was laid off from radio company Clear Channel, where he was the vice president for southern Arizona in the outdoor division. He went to work that day prepared to lay off some of the employees he oversaw.
Instead, his boss told him his job had been eliminated. Sitton, 54, had been with the company for 8 1/2 years.
“I was speechless. I just sat there with my mouth agape,” says Sitton, who has two daughters, one who is a sophomore in college and another who is a junior in high school, preparing for college.
“I’ve not (formally) applied for a job since I was 19 years old. I’ve always gone on to the next one, so it’s going to be an interesting experience.”
‘Your world is taken away’
The ability to move to a place where there are better opportunities is important to the health of the U.S. economy and has long made downturns in the United States shorter and shallower than those in other parts of the world, Zandi says.
If people can move to find work, they can get back on their feet and spend money more quickly, helping to lift the economy sooner than if they had not moved.
In Europe, for example, people are far less likely to be willing to move, providing less flexibility in the labor market.
“The ability of people to relocate throughout the country has been one of the United States’ greatest competitive advantages. It’s a thing unique to our economy,” says Mark Vitner, senior economist at Wachovia Securities in Charlotte.
Not only is it tough to find jobs elsewhere this time around, but with the housing market in a deep slump, people who could find a job elsewhere are stuck.
“That really hurts people’s ability to be mobile because they can’t sell,” says Donald Grimes, senior research associate at the University of Michigan who studies labor trends.
Photographer Meg McKinney, 54, of Birmingham, Ala., says she has moved in the past to boost her career.
But after being laid off from Southern Living in November after 14 years at the magazine, McKinney is not sure it will be possible to relocate, because she owns a home and has a mortgage.
“It’s tough,” she says. “You don’t understand why your world is taken away from you and what it is going to be replaced by. What kind of standard of living will I have in the future? Big worries. I try not to think about them too long.”
Software engineer Adam Risoldi, 25, has had several job leads outside of his home base of Phoenix since he was notified by IBM on Jan. 27 — the day after he received a positive performance review — that Feb. 26 will be his last day at the company. He owns a home and pays $2,750 a month on his mortgage.
He’s considering moving in with his parents in New Jersey if he can find a job there.
That would allow him to continue paying his mortgage while his house is up for sale in one of the worst markets in the nation.
“I was originally planning to move back to the East Coast” anyway, Risoldi says.
“But,” he says, “I wanted to do it on my own terms.”
Conference Board chief economist Bart van Ark attributes the uniformity of the downturn to the financial industry’s crisis, which has led to tighter or more expensive credit for businesses and consumers no matter where they are located.
Without access to affordable credit, businesses and consumers can’t finance investments, inventories and other spending. That has led to a sharp deterioration in the economy from coast to coast.
The New York-based Conference Board’s measurements of consumer confidence are down sharply in all regions of the nation compared with a year ago.
“There is really no positive news pretty much to be found anywhere,” van Ark says.
Consumer confidence is directly linked to the job market. Even if they have a job, if people are worried they may lose it or at least some of their income, their confidence wanes and their desire to spend money drops.
Consumer spending accounts for more than two-thirds of U.S. economic activity, so if consumers cut back, the economy slows more, threatening even more jobs.
In a USA TODAY/Gallup Poll of 1,027 adults conducted Jan. 30-Feb. 1, 38 percent said they had cut back on spending “a lot” in the last six months because they were concerned about their income; an additional 36 percent said they had cut back “a little.”
About 41 percent said they had lost a job or had a close friend or relative who had lost a job in the last six months — meaning that for many people, the labor market’s deterioration is more than just a newspaper headline.
The lack of confidence among consumers is having a ripple effect throughout the economy, notes Federal Reserve Bank of Dallas President Richard Fisher. And it’s not just consumers. He says business owners are cutting workers because of what he sees as a “paucity of confidence.”
“I’m seeing businesses make decisions that may well prolong this downturn,” he says, noting that Texas had one of the nation’s best-performing economies in 2008 but sank into recession at the end of the year with the rest of the country.
Getting back to ’07 job levels
Employers across the country are expected to begin adding jobs in 2010, but it won’t be until late 2011 that the number of jobs is equal to the levels that existed when the recession began at the end of 2007, Moody’s Economy.com predicts.
That is assuming Congress enacts a fiscal stimulus plan in the neighborhood of $825 billion and an expansion of the financial system’s bailout, including a program to prevent home foreclosures.
Other analyses are gloomier. Another consulting firm, IHS Global Insight, thinks that the prerecession peak of jobs won’t be reached until the third quarter of 2012.
Some parts of the country will see a turnaround sooner than others, analysts say.
Employers in the District of Columbia and in 10 states, mostly in the South and West, are expected to begin adding jobs at the end of 2009, according to Moody’s Economy.com. The rest won’t see gains until the first half of 2010, with two states — Wisconsin and Iowa — continuing to shed jobs until the second half of next year.
Once the economy does improve, key demographic trends that were in motion before the recession began in December 2007 are expected to resume.
Most notably, the Sun Belt is expected to be a key source of new jobs as Baby Boomers continue their migration to the area for retirement, according to Moody’s Economy.com. Their demand for services, such as health care and leisure activities, will create jobs and have a ripple effect through the region’s economy.
Nevada, New Mexico and Texas are expected to have the strongest job growth from the end of 2008 until the end of 2012, when President Obama will be up for re-election.
Overall, U.S. employers are expected to boost jobs by an average of 1.3 percent each year during that time, according to Moody’s Economy.com.
Steve Addington, 59, moved last month from Muncie, Ind., to Avondale, Ariz., where he and his wife, Janet, bought a retirement home four years ago. He was laid off Oct. 28 from his job as a general manager of a car dealership. Figuring he had a better chance of finding a job in Arizona than in Indiana, he moved.
He started a job in January selling cars, which has meant about a 50 percent pay cut from his former job. His wife, a teacher, is staying behind in Indiana for the rest of the school year. After that, they will reassess where they should live.
Addington says he’s been on an “emotional roller coaster” since losing his job.
“The rug’s been pulled out from under me,” he says, while noting he is better off than a lot of people. “I am not starving to death. I had some money set aside, but it only lasts for so long. You just have to pull yourself up and try again.”
The non-partisan Congressional Budget Office estimate of jobs that would be created by the Senate bill:
— 2009. 900,000 to 2.4 million, reducing unemployment by 0.5 percent to 1.3 percent
— 2010. 1.3 million to 3.9 million, reducing unemployment by 0.6 percent to 2 percent
— 2011. 600,000 to 1.9 million, reducing unemployment by 0.3 percent to 1 percent
Projected changes in the number of people employed from fourth quarter of 2008 (1) through fourth quarter of 2009:
Industry … Change
Government … 0.5 percent
Education, health services … 0.2 percent
Other services … -1.4 percent
Information … -1.5 percent
Wholesale trade … -1.8 percent
Leisure, hospitality … -1.9 percent
Transportation, warehousing … -2.1 percent
Retail trade … -2.5 percent
Utilities … -2.5 percent
Financial activities … -3.1 percent
Professional, business services … -3.8 percent
Manufacturing … -3.9 percent
Natural resources, mining … -4.2 percent
Construction … -5.8 percent
Total jobs … -2.0 percent
1 — Based on preliminary estimates
Source: Moody’s Economy.com
2009 forecast for job losses
State … Pct. change … Jobs lost
Alabama … -1.3 percent … 25,823
Alaska … -1.5 percent … 4,655
Arizona … -2.1 percent … 53,505
Arkansas … -1.4 percent … 17,127
California … -1.9 percent … 279,260
Colorado … -0.8 percent … 18,708
Connecticut … -3.4 percent … 56,882
Delaware … -2.3 percent … 9,843
Dist. of Columbia … -0.1 percent … 633
Florida … -3.0 percent … 231,265
Georgia … -1.2 percent … 47,531
Hawaii … -3.4 percent … 21,228
Idaho … -1.2 percent … 7,525
Illinois … -2.2 percent … 132,360
Indiana … -1.5 percent … 44,615
Iowa … -2.5 percent … 37,692
Kansas … -2.4 percent … 32,820
Kentucky … -2.8 percent … 51,341
Louisiana … -1.8 percent … 34,989
Maine … -2.2 percent … 13,330
Maryland … -1.1 percent … 28,133
Massachusetts … -2.8 percent … 90,025
Michigan … -4.3 percent … 175,368
Minnesota … -1.5 percent … 41,795
Mississippi … -2.6 percent … 29,693
Missouri … -2.9 percent … 80,550
Montana … -1.4 percent … 6,366
Nebraska … -0.9 percent … 8,374
Nevada … -1.0 percent … 12,696
New Hampshire … -1.2 percent … 7,519
New Jersey … -2.3 percent … 94,001
New Mexico … -0.9 percent … 7,164
New York … -2.6 percent … 224,954
North Carolina … -1.6 percent … 67,129
North Dakota … -0.8 percent … 2,809
Ohio … -2.9 percent … 154,938
Oklahoma … -1.6 percent … 24,909
Oregon … -1.0 percent … 17,737
Pennsylvania … -1.7 percent … 95,613
Rhode Island … -2.5 percent … 11,791
South Carolina … -1.4 percent … 26,287
South Dakota … -1.1 percent … 4,342
Tennessee … -2.4 percent … 66,102
Texas … -0.7 percent … 71,930
Utah … -2.5 percent … 31,016
Vermont … -2.4 percent … 7,312
Virginia … -2.3 percent … 85,978
Washington … -0.2 percent … 6,939
West Virginia … -2.7 percent … 20,409
Wisconsin … -2.4 percent … 68,521
Wyoming … -1.3 percent … 3,747
U.S. total … -2.0 percent … 2.7 million
1 — Based on preliminary estimates
Source: Moody’s Economy.com
By Barbara Hansen, Barbara Hagenbaugh