Hiring Delay After Recession Not Unusual Companies are doing more temporary hiring, and employees are working longer hours. But as long as employers remain skittish, the recovery will likely be weak. Companies won't add permanent jobs until they see demand growing, economists say.
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Hiring Delay After Recession Not Unusual

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Hiring Delay After Recession Not Unusual

Hiring Delay After Recession Not Unusual

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One of the U.S. economy's biggest problems is jobs or a lack of them. The economy has been growing for more than half a year, but employers keep cutting jobs, and the unemployment rate is still high.

As NPR's Jim Zarroli reports, this kind of hiring lag is by no means unusual.

JIM ZARROLI: At Quadrant Plastic Products in Reading, Pennsylvania, employees in goggles and blue T-shirts stand hunched over their workstations. The building dates to Victorian times, but the factory floor is a noisy sea of high tech manufacturing equipment churning out customized plastics. A few years ago, business was booming and Quadrant took on new workers, says process technician Dave Wagner.

Mr. DAVE WAGNER (Process Technician, Quadrant Engineering Plastic Products): Then just like that the recession hit and we sort of had to turn these guys out then. That was really tough to do because the guys were really coming up to speed the newer ones and we had a lot of good prospects here, but it was a shame we had to let them go.

ZARROLI: For a while, business dropped off. But orders began picking up last year. Quadrant has rehired some people and restored workers' hours. But spokesman Kress Schwartz says the company, whose customers include medical equipment and semiconductor manufacturers, isn't taking on any new workers.

Mr. KRESS SCHWARTZ (Spokesman, Quadrant Engineering Plastic Products): When we see growth in those industries, we'll staff up.

ZARROLI: And you just don't see that kind of long term growth at this point?

Mr. SCHWARTZ: As an organization, we use all sorts of tools to try and see what each of those specific industry segment is doing, and they all have wonderful indicators, and all those indicators show some growth, but not a level of growth that would require us to knock out a wall and add onto the facility.

ZARROLI: Quadrant is waiting to see whether the economic rebound is for real before it hires. That's pretty typical as recessions end. Economist Diane Swonk of Mesirow Financial says even when companies do start hiring, they do it gradually.

Professor DIANE SWONK (Economist, Mesirow Financial): What they do initially is work their existing labor force longer hours, add on, you know, additional overtime hours, and then they finally when they feel confident enough that the recovery they're seeing is real, they actually dip their toe and make the commitment into the pool of hiring.

ZARROLI: The result is a hiring lag and there's a lot of precedent for it. The last recession ended in November 2001. Unemployment kept rising until June 2003, when it hit 6.3 percent. The recession before that ended in March 1991, but unemployment didn't peak for 15 months. It was a huge political headache for then-President Bush, who had to convince a skeptical public that things really were improving.

(Soundbite of applause)

President GEORGE H. W. BUSH: I would say it just shows that the economy - the recovery which we're in, is not as robust as I'd like to see it.

ZARROLI: Today, Democrats are in virtually the same position waiting for job growth that history suggests is bound to come eventually. How long it will take to get here is a matter of some debate. Economist Lakshman Achuthan of the Economic Cycle Research Institute says the job market has already begun to recover about six months after the recession ended.

Mr. LAKSHMAN ACHUTHAN (Economist, Economic Cycle Research Institute): That's much, much faster than you saw jobs growth coming out of the last two recessions, where it took well over a year. The last recession it took 21 months till you had sustained positive jobs growth. We're going to have that right here at the beginning of 2010.

ZARROLI: Others are more skeptical. Economist Sean Snaith of the University of Central Florida says there are still a lot of lingering problems confronting the economy: a wave of mortgage foreclosures, uncertainty about taxes and federal regulation and a weak commercial real estate market.

Professor SEAN SNAITH (Economist, University of Central Florida): With all of these things going on, you know, the right thing the right response for these bankers is really just to hunker down and to sandbag and to try to wait out the storm, as opposed to get out there and start freely lending once again.

ZARROLI: As a result, credit is harder to get, which is especially tough on small businesses that create a lot of jobs. The good news is that companies are doing more temporary hiring and employees are working longer hours. Traditionally, those are harbingers of a job recovery. But as long as employers remain skittish about their prospects, that recovery will probably be a weak one.

Jim Zarroli, NPR News, New York.

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