Job seekers face tougher market, analysts say

Competition higher

those who find work often earn less money

Rising unemployment predicted

September 02, 2002|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

This Labor Day, job seekers are more likely to find that it takes longer to find work, the pay may not be as much and the competition is greater, employment specialists say.

"It's a tough time for workers right now. We're in the midst of the highest unemployment since the early 1990s. There is a risk that it may continue to go in a jobless recovery pattern," said John Challenger, chief executive officer of Challenger, Gray & Christmas Inc., an outplacement firm in Chicago.

On Friday, the Labor Department will release its employment report for August. Economists predict the number of new jobs created last month, excluding agriculture, will be 25,000 to 50,000. In July, 6,000 new jobs were created, or one-tenth the number that economists anticipated.

"It's certainly better than declines. But it's not a whole lot better," said David Resler, chief economist with Nomura Securities in New York.

In the boom times of the late 1990s, the economy was adding on average 200,000 jobs a month.

Scott Anderson, an economist with Wells Fargo & Co. in Minneapolis, predicts that the national unemployment rate will inch up to 6 percent for August, after staying level at 5.9 percent in June and July. He expects unemployment to peak at 6 percent.

Economists say that with productivity growth still strong, businesses are reluctant to add new workers when the economic recovery seems tentative.

Maryland, with an unemployment rate of 4.2 percent in July, may see a slight uptick in unemployment in coming months, said Anirban Basu, director of applied economics at RESI, the consulting arm of Towson University.

Since April, according to the U.S. Bureau of Labor Statistics, Maryland's unemployment rate has been inching downward. But Basu said that indicates the number of people looking for work has dropped off.

Once the economic recovery appears to have more traction, more workers will begin looking for work and push up Maryland's unemployment rate, Basu said. He expects the rate to begin falling next year.

Even when unemployment drops nationally, Anderson said, "it will be a slow ride down." The economist said there may be months when the rate shrinks by a mere one-tenth of a percent.

"Workers will have to work hard to get a job," said Mark Zandi, chief economist with Economy.com in West Chester, Pa.

On average, job seekers will spend 3.5 months landing a job, a month longer than a year ago, according to Challenger. Not since 1999 has it taken that long.

Challenger's data are based on a survey over the course of the year of 3,000 fired managers with a median income of $70,000.

Even when workers find jobs, a growing number aren't making as much as they used to, Challenger said.

The percentage of job seekers receiving comparable or larger salaries in a new position fell to a record low of 75 percent in the second quarter, compared with 89 percent a year earlier. It's also the first time the figure fell below 80 percent since Challenger began tracking the statistic in 1986.

One reason for the pay difference is that workers were well-compensated and even sometimes overpaid when the economy and market were hot, said Bill Coleman, senior vice president of compensation for Sala ry.com in Wellesley, Mass.

Also, after last year's terrorist attacks, some workers sought jobs that were more meaningful to them or gave them more time with their families but didn't pay as well, Coleman said.

Coleman anticipates that those sending out resumes this week will have more competition. Many workers who lost jobs earlier decided to sit out the summer, living on severance and waiting until after Labor Day to begin the job search when the economy might be in better shape, Coleman said.

"After Labor Day, there could be this big rush of people looking for jobs," he said.

But people shouldn't get too discouraged by the job outlook.

"It's more optimistic than it was a year ago. We're further into the process of turning the economy around. And a year from now, it will look better," Resler said.

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