Most businesses don't have big hiring plans for 2011

Economic uncertainty and productivity gains hold back job creation

March 22, 2011|By Jamie Smith Hopkins, The Baltimore Sun

Maryland needs a sustained hiring surge to recover from devastating job losses during the recession, but few businesses appear to be planning anything more than modest work-force increases this year.

More than 80 percent of mid-Atlantic employers said they expected "limited" or "sluggish" hiring at their companies in 2011, according to a survey by employment-services firm Manpower released this week. An earlier survey of Maryland companies by the University of Baltimore found that about 85 percent expected to expand slightly or to hold the line in the near term, with 8 percent contemplating cuts.

"There's so much uncertainty now," said Richard Clinch, director of economic research at the University of Baltimore's Jacob France Institute. "We need a pronounced national recovery for the Maryland economy to start to grow, and I think that has been derailed."

The economic ramifications from earthquake damage in Japan, unrest in the Middle East, rising oil prices and budget battles in Washington give businesses plenty to be uncertain about, extending the pain of tens of thousands of unemployed Marylanders desperately searching for work.

The state has about 110,000 fewer jobs now than it did at the beginning of 2008, when the recession that would become the worst economic slump since the Great Depression was just beginning to set in.

Since that sharp downturn officially ended nearly two years ago, job creation has hovered between negative and tepid. Maryland employers expanded their payrolls by just 4,500 people last year, according to the latest estimates from the U.S. Department of Labor. That's a fraction of the 30,000 positions employers added during an average year as the economy chugged along in the mid-2000s.

Even at that pre-recessionary pace, it would take 31/2 years for Maryland to get back the number of jobs it enjoyed at the start of the recession.

And at that point, the state still wouldn't be fully out of the hole. A growing population means thousands of new jobs are needed each year just to keep the unemployment rate from rising.

"The anemic job growth has not only hurt the people who are out of work and looking for work, but the people who have just graduated," said Daraius Irani, director of the Regional Economic Studies Institute, Towson University's economic consulting arm.

About one-third of Maryland businesses responding to a February survey by the Federal Reserve Bank of Richmond said they planned to expand their work force over the next six months. But the monthly survey has shown similar results for a while now and it hasn't translated into much actual hiring, said Andy Bauer, a regional economist with the Federal Reserve Bank of Richmond's Baltimore branch.

Some businesses are seeing demand pick up for their products and services, "but they're still very cautious," Bauer said. Economic downers such as higher oil prices keep intruding to give wary businesses a reason to hold off on hiring.

"There's a lot of firms adapting technology to realize productivity gains or efficiencies," Bauer added. "Even firms that are re-staffing, they're saying, 'We don't need to re-staff to the levels we had prior to the recession because we've found ways to become leaner so we can do more with less.'"

Some companies, to be sure, are expanding in a significant way.

Owings Mills-based Glass Jacobson, a certified public accountancy and wealth management firm with about 70 employees, acquired a Rockville practice in November, hired 10 people in the past six months and expects to add about five more this summer.

The firm avoided cutbacks during the recession, and business has been good since, said Ed Jacobson, president of Glass Jacobson. He anticipates a strong 2011. And he doesn't want to wait until the firm is stretched thin to add new positions.

"We have to stay a step ahead of our clients' demands," he said. "Referrals are our primary source of new business, so service is goal one."

Pittsburgh-based PNC Bank, meanwhile, is looking for bank tellers, loan officers, financial consultants and wealth- and asset-management professionals at its offices and branches in Maryland. In March the company posted more than 50 Maryland jobs, mostly in the greater Baltimore region, on its career website. Some are positions that opened up as people left, while others are new.

"We're definitely in a hiring mode," spokeswoman Darcel Kimble said.

But other firms are in a layoff mode. Northrop Grumman Corp. said Tuesday that it must lay off nearly 150 employees in Elkridge over the next several months because a U.S. Postal Service contract is ending. Government contractors across the country are anxious about how federal budget cutting will affect their bottom lines.

A variety of Maryland economists expect more job creation this year than in 2010, but they disagree about the extent.

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