Study: Job Flexibility Damping Hiring
Sat Jul 5, 7:18 AM ET
URL:http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=3&u=/nm/economy_jobs_changes_dc&sid=95609869
WASHINGTON (Reuters) - A greater reliance on overtime and temporary and part-time workers has allowed U.S. employers to delay hiring as the economy struggled back from both the 2001 and 1990-91 recessions, a new study found.
The study by researchers at the Kansas City Federal Reserve (news - web sites) Bank found both recoveries deserved the moniker "jobless" because one year after they began, the level of employment had failed to rise.
While many economists think the 2001 recession drew to a close in December of that year, the economy has continued to shed jobs. The Labor Department (news - web sites) said on Thursday non-farm employers cut 30,000 workers from their payrolls last month.
The study by Stacey Schreft and Aarti Singh, recently posted on the regional Fed bank's Web site, found a lack of jobs was not the only similarity.
"Apart from joblessness, these recoveries have another feature that distinguishes them from the typical recovery: the greater use of just-in-time employment practices," they said.
In addition, they found the lack of jobs through the first year of both the current recovery and the slow crawl back from the 1990-91 downturn could not be explained solely by the economy's relative sluggishness.
Instead, they concluded businesses relied on "just-in-time employment practices" -- the use of temporary and part-time workers and overtime -- to meet increases in demand for their products and services.
"Just-in-time employment practices give firms more flexibility in employing labor, which is especially valuable early in recoveries," the study said.
"In the jobless recoveries, they allowed firms to expand production on short notice in response to signs of increased demand and to wait for signs that the pickup in demand would be sustained before hiring workers on a more permanent basis."
"As a result, firms kept trimming payrolls well into those recoveries, and more of the laid-off workers suffered long-term bouts of unemployment than in the typical recovery," it said.
The Labor Department said on Thursday the number of unemployed workers experiencing long-term joblessness continued to mount in June, reaching 2.04 million, the highest level since December 1992.
The study said increased reliance on "just-in-time" employment practices appeared to be part of longer-term trends toward a more flexible workforce.
"It is too soon to tell if future recoveries will also be jobless," they said. "There is every reason to expect, however, that the use of just-in-time employment practices will persist."
They called their findings "largely positive for the economy overall," but said it was unclear if workers benefited over the long haul. |
