Job competition toughest since recession began

WASHINGTON — The number of job seekers competing for each opening has reached the highest point since the recession began, according to government data released Friday.

The employment crisis is expected to worsen as companies stay reluctant to hire. Many economists expect a jobless recovery, putting pressure on President Barack Obama and congressional Democrats to stimulate job creation.

There are about 6.3 unemployed workers competing, on average, for each job opening, a Labor Department report shows. That’s the most since the department began tracking job openings nine years ago, and up from only 1.7 workers when the recession began in December 2007.

The highest point after the 2001 recession was 2.8 workers per opening in July 2003, as the economy suffered through a jobless recovery.

Employers have cut a net total of 7.2 million jobs during the downturn. While layoffs are slowing, Friday’s report shows the other critical piece of a labor market recovery — hiring — has yet to begin.

“Fewer people are facing job loss,” said Heidi Shierholz, an economist at Economic Policy Institute in Washington, “but once you have lost your job, you are in serious trouble.”

The department’s Job Openings and Labor Turnover survey found less than 2.4 million openings in August, the latest data available. That may seem like a lot of jobs, but it’s down from 3.7 million a year ago and half its peak in June 2007. It’s also the lowest tally on nine years of government records.

At the same time, the number of unemployed Americans doubled from the beginning of the recession to 14.9 million in August.

Economists fear the job market will take years to recover.

Shierholz said the economy faces a “jobs gap” of almost 10 million — the 7.2 million jobs lost plus the roughly 125,000 per month that would have been needed since the recession began just to keep up with population growth.

To close that gap and get back to pre-recession levels in two years would require more than 500,000 new jobs per month, a pace of job creation that hasn’t been seen since 1950-51, Shierholz said.

Most analysts expect the nation to keep losing jobs through this year and the unemployment rate to peak above 10 percent by the middle of next year, even as the economy starts to recover.

“The recovery in output continues to be unaccompanied by a recovery in jobs,” said Nigel Gault, chief U.S. economist for IHS Global Insight. He expects the unemployment rate, currently at 9.8 percent, will be at 8.6 percent in 2012.

Cynthia Rosso, a Potomac Falls, Va.-based marketing and communications professional laid off in March, is painfully aware of the competition she faces.

A networking group where she once announced jobs she was trying to fill as a manager is now dominated by people looking for work.

“Very few people get up and say, ‘I have a job to offer,’” she said.

Rosso went to a job fair over the summer but turned back after seeing a line snaking around the building. She later heard that 3,000 job seekers showed up to vie for the attention of a handful of employers.

The jobs crisis is likely to have political repercussions. The last time the unemployment rate topped 10 percent, in 1982, President Ronald Reagan’s Republican party lost 26 seats in midterm elections.

Congressional Democrats are working on various proposals to both provide relief to the unemployed and create jobs. The House and Senate have both agreed to extend jobless benefits, though the two bills have to be reconciled.

House and Senate leaders also are considering extending an $8,000 tax credit for first-time homebuyers, and creating a new credit for companies that add jobs.

Still, Republicans in Congress say rising joblessness and the talk of additional policy moves demonstrates that the administration’s $787 billion stimulus package hasn’t worked. Administration officials contend that job losses would have been worse without it.

The Federal Reserve, meanwhile, is expected to keep the short-term interest rate it controls at a record low near zero until sometime next year, in an effort to bolster the economy. High unemployment makes price hikes less likely, but some analysts fear inflation could result if the Fed waits too long to raise rates.

Economists offer several reasons why companies aren’t hiring. Many employers laid off huge numbers of workers earlier this year but have since found that productivity jumped, enabling them to maintain output.

“For now, many of them are trying to find out how far they can push that,” Gault said.

Many employers also are unsure about whether the economy can continue to grow once the impact of government stimulus fades and aren’t likely to hire until that uncertainty eases, Gault said.

Efforts by the administration to reform health care and address climate change also create uncertainty among businesses about whether they’ll soon be facing higher costs, according to Steven Davis, an economics professor at the University of Chicago.

“When there’s that type of uncertainty in the air, it’s a good reason to pull back and wait before making any (hiring) decisions,” he said.