Employers Moving Slowly to Fill Jobs

From the Wall Street Journal | Aug 11, 2010 | By MARK WHITEHOUSE

Employers filled available jobs at a slower pace in June, in a development that could further complicate the U.S.'s battle with long-term unemployment.

The Labor Department reported Wednesday that nonfarm employers made 4.3 million new hires in June, down 7% from May. That left them with 2.9 million job openings at the end of the month, unchanged from May.

The June data highlight a growing disconnect in the labor market. Even as jobs remain scarce, employers are being unusually slow to fill positions—a problematic trend at a time when 4.3% of the labor force has been out of work for more than six months. As of June, job openings were up 26% from mid-2009, when the economy bottomed out. New hires rose only 5% over the same period.

"It's troubling," said Henry Mo, an economist at Credit Suisse in New York. "We need employers to hire more boldly to make the recovery self-sustaining, but we're not getting there."

Economists, employers and job seekers offer a litany of reasons for the disconnect. Extended unemployment benefits can make people less willing to take whatever jobs are available. Some companies might try to lowball salaries. Many of the unemployed don't have the skills companies require. Housing troubles can prevent people from moving for work.

Another part of the problem, said Jeff Joerres, chief executive of staffing firm Manpower, could be companies' renewed uncertainty about the economic outlook. "It's not uncommon for us to get the right person for the job and the companies still drag their feet for a month or more, just to try to get better visibility for the future and to save another month of expense," he said.

Mr. Joerres also notes that he has seen many companies reorganizing their activities and investing in technology to boost productivity, an effort that is changing the kinds of employees they need. It can add to demand for the scarce highly-skilled workers who can implement the changes, but it also allows companies to lower the requirements—and salaries—for jobs in increasingly automated warehouses and offices.

Overall, the competition for available jobs remained intense in June. The number of job seekers for each opening stood at about five, down from a peak of more than six in November 2009 but still well above the longer-term average of 2.6. Meanwhile, companies discharged people at a slightly higher rate: They laid off 1.6% of all employees in June, up from 1.5% in May.

Workers also remained wary of leaving jobs. Some 1.5% of all employees quit their jobs in June, well below the longer-term average of 2.0%.