Job market outlook grim for 2009

CHICAGO, ILL.
December 22, 2008 7:00am

As a New Year and new president wait in the wings, the economy and job market have fallen into what many consider the worst crisis since the Great Depression.

The holiday season has done little to slow the pace of downsizing, with year-to-date job cuts already in excess of 1,000,000 and expected to close the year at a five-year high.

And now another dash of bad news.

Despite planned job-creation initiatives by the new administration, job market conditions are expected to remain bleak in 2009, according to an outlook released Monday by outplacement company Challenger, Gray & Christmas Inc. of Chicago, ill.

Job cuts are likely to surpass 1,000,000 again next year, as employers continue to adjust payrolls in light of weak consumer and corporate spending, the report says.

“It will take time for any stimulus measures to work their way through the economy. Even if the measures work, it could take several more months for consumers and corporate America to regain confidence and begin spending again,” says John Challenger, chief executive officer of Challenger, Gray & Christmas.

Some economists are anticipating that unemployment, which currently stands at a national average of 6.7 percent, to reach as high as 9.0 percent before it starts to retreat. If that happens, it would be the highest jobless rate since 1983.

The number of Americans unemployed for at least 27 weeks is already at its highest level since 1983. In November, the Bureau of Labor Statistics counted 2.2 million people who have been seeking employment for six months or longer. This does not include the millions who have simply given up and left the labor pool.

“It is important to remember that the beginning of an expansion does not bring instant job creation. After the last recession officially ended in November 2001, the unemployment rate continued to rise, peaking at 6.3 percent in June 2003. We are already beyond that point, and most experts consider this recession to be in its nascent stages,” says Mr. Challenger.

“The state of the economy and the job market will have a significant impact on the workplace trends in 2009. It is typically in times of turmoil that we see the most dramatic shifts in where, when and how we work. For example, this downturn could lead to the biggest leap in the availability of telecommuting, as companies seek cost-cutting alternatives to layoffs. Many companies have found that they can greatly reduce their real estate costs by having employees work from home,” says Mr. Challenger.

In another example, the Challenger report notes that job seekers may utilize new, more creative ways to find employment, from the increased use of social networks to posting video resumes on YouTube.

“Job seekers have only scratched the surface when it comes to using Web 2.0 to assist their search. They are learning that simply posting resumes on job boards and responding to online help-wanted ads is not enough. During downturns in the 80s and 90s, there were several instances of job seekers parading the sidewalks with sandwich boards that contained their resume. YouTube could become the sandwich board of the new millennium,” says Mr. Challenger.

In addition to predictions on workplace trends, the Challenger outlook also examined which industries could see growth in the coming year.

“There are some bright spots, although competition for jobs will be heavy across the board. Even areas that have been hiring in recent months, such as energy, health care and education are starting to feel the impact of the downturn.

“Several oil exploration firms have announced the delay of new projects due to falling oil prices. Schools remain in desperate need of good teachers, but state and local budgets are suffering from falling tax revenues, causing some schools to freeze hiring and, in some areas, make staffing cuts,” says Mr. Challenger.

“Despite these issues, we still list these among the more promising industries. Hiring may stall briefly in the short term, but these areas are expected to be healthy sources of job creation over the long term.

“One industry that could get an immediate boost from the Obama presidency is construction, which will benefit from the President elect’s plan to move quickly on a massive, nationwide infrastructure rebuilding program,” says Mr. Challenger.