At last, an economic recovery with jobs.
A software engineer in San Diego finds a job only two months
after being laid off. An aluminum company in Muscle Shoals, Ala., is
recalling workers, some laid off as long ago as 1996. And a budding
restaurant chain based in Lubbock, Texas, will be hiring 900 chefs,
waiters, and dishwashers over the next 14 months.
These are just some of the ways an economy - now described by
even some experts as sizzling - is finally creating jobs faster than
they are lost.
Economists expect that evidence of this change will start to show
up over the coming months as up to 150,000 new jobs are created each
month. Hiring appears to be happening across the board: from
airlines who are recalling laid-off workers to manufacturers who can
no longer meet orders simply by turning on new machines. Even
Silicon Valley has "help wanted" signs.
"All signs are pointing to more jobs," says Sung Won Sohn, chief
economist at Wells Fargo Banks in Minneapolis. "We are at the point
where companies need more people to meet the increase in demand in
This shift has important economic ramifications. More jobs will
keep consumers spending instead of worrying about layoffs. It will
also give businesses confidence that the long-anticipated economic
recovery has some depth to it. And it comes at a time when the
economy needs help sustaining the stimulative effect of both tax
cuts and lower interest rates, which has been waning.
"A resumption of job gains more than adequately fills the gap,"
says Richard DeKaser, chief economist at National City Corp. in
Cleveland. "When you have income realized through work, about 98
percent of it is out the door as soon as it's earned."
The hiring spurt could also have important political
ramifications, particularly as the 2004 presidential race nears. A
better employment picture could relieve some of the criticism
directed at the Bush administration, and it could make Democrats
rethink their campaign strategy.
Improvement slow to register
But while the economy will be creating new jobs, economists warn
that the improvement won't show up initially in the widely watched
unemployment rate. In fact, the rate - currently at 6.1 percent -
might rise over the coming months as discouraged workers start
looking for work again. "The rise in the unemployment rate is
actually a good sign in the early stages of a recovery," says Mr.
Sohn. "The rate shouldn't start dropping in earnest until 2004."
Still, there have been incipient signs for weeks that improvement
is on the way. Initial unemployment claims have been trending down,
including last week. Last month, the Department of Labor reported a
gain of 57,000 jobs, the first net increase in eight months.
In surveys, businesses say they intend to hire more workers. This
is supported by anecdotal evidence. IBM says it will create 10,000
new jobs next year in consulting and software. Union Pacific, the
nation's largest railroad, will add 1,000 conductors and engineers
before the end of the year. And Hyundai, the Korean vehicle company,
is building a 400-employee tech center outside of Ann Arbor, Mich.
In addition, reports of new layoffs are slowing down. "The
layoffs and working out of the bubble from the excesses of the 1990s
is almost finished," says John Challenger, whose outplacement firm,
Challenger, Gray & Christmas, tracks downsizings.
In fact, many companies have scaled down so much that they need
to start to rebuild their workforces. That's what is happening at a
former Reynolds Metals plant, now called Wise Alloys in Muscle
Shoals, Ala. Over the past four years, the plant, which produces
aluminum sheeting for the food and beverage industry, reduced its
workforce by about 33 percent. …