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Job Talk: Area labor analyst says businesses are gun-shy about hiring

This article first appeared in the St. Louis Beacon, Dec. 3, 2010 - For longtime area labor analyst Russ Signorino, the true harbinger of an economic recovery will be a decline in the U.S. unemployment rate.

"It's not just the number of people you're adding to the payrolls, but can you get that rate down? That's when you know the economy has started to kick in," Signorino said.

We're not there yet.

The jobs news for November was disappointing: The national unemployment rate rose to 9.8 percent, its highest level since April, according to the Labor Department. In a report released Friday morning, the department said that just 39,000 jobs were added to the economy last month, as compared to its revised numbers for October, when 172,000 jobs were added. The unemployment rate in October was 9.6 percent.

Missouri lost 2,900 jobs in October, nudging the state unemployment rate to 9.4 percent from 9.3 percent in September. Still, the state unemployment rate was slightly improved from October 2009 when it was 9.7 percent.

In Illinois, the unemployment rate decreased slightly -- to 9.8 percent in October from 9.9 percent the month before. Though the state's rate is still above the national rate, it is an improvement over the first quarter of this year when unemployment was well above 11 percent. Illinois added 8,000 jobs in October.

Because Congress has not acted yet to extend unemployment benefits, they will begin to run out this week for about 2 million Americans, including 43,000 Missourians. The emergency unemployment insurance was funded by the federal government.

"When people lose extended benefits, they have no resources," Signorino said.

And a high unemployment rate is a drain on the economy, he added.

"You've got to do something about that drain on the economy. You've got to get that rate down. And not because people are dropping out of the labor force but because they are finding work," he said.

'Everybody is Gun-shy Right Now'

Recovery is taking longer because the recession cut a wide swath across the U.S. economy -- and also because the economy has changed, Signorino said.

"The industrial mix is much different than it was in past recessions and recoveries where you had this large manufacturing base that would pull you out of a recession in a relatively short period of time. Manufacturing cuts back on workers quickly, but as soon as demand builds up, they add workers. You used to see that nationally and in St. Louis," he said.

The region's downsized auto industry illustrates this shift.

"When the auto industry went bad during a recession, you saw a lot of auto workers lose their jobs in the St. Louis area. But when auto sales began to pick up, those workers came back to their jobs in a relatively short time. That's a major kick to your local economy that we don't have anymore," he said.

Businesses, including those that are doing well, are still hesitant to hire new employees or call back laid-off workers, he said.

"It seems like everybody's just hanging back, waiting for some great news to come out where they can say, 'Let's go ahead and move forward. Let's start hiring people. Let's start expanding our business.' Everybody is gun-shy right now, but in many cases if you take a look at the bottom line many of the businesses have been doing pretty well as far as their profits and getting their debt loads down," he said. "Just look at what's happened with General Motors. Talk about a large corporation that pretty much came back from being completely dead."

Signorino said that eventually businesses will have to expand their workforces because many are short-staffed.

"There is only so much you can get out of each worker," he said. "Technology only does so much. So if you want to continue to grow, you're going to start adding people to payrolls."

On a positive note, the massive layoffs that followed the financial meltdown of 2008 have stopped, he said.

"That was driving the unemployment rate up," Signorino said. "But we're not seeing the big callbacks or some sector of the economy adding a significant number of new workers or new jobs that would bring that rate down."

Another factor: Retail and service industries now try to maintain a more steady employment base year-round rather than relying on temporary workers for seasonal work.

"If we continue at this pace, the rate will start coming down but not quickly," Signorino said. "What we're going to see is a slow, steady increase in jobs and a slow, steady decline in the number of unemployed. And for many of us, it may take months -- possibly a year or more before we realize that things are getting better. Which is much different than what we've seen in past recessions where we may have seen that within a couple of months."

Gridlock in Washington

Signorino believes the economy is still pretty well diversified and remained stronger than some economists predicted because of the jobs stimulus and other actions taken by the federal government.

"Some of the stuff the federal government has done -- which is now controversial -- actually did make a difference," he said. "It didn't cause us to go into a nice recovery, but I think it laid a floor that the economy didn't go below. Some of those moves I think were the right moves to make. You still have something you can build upon. It's not like in the 1930s where you had an economy that was really, really down."

Signorino said he would like to see the nation's elected leaders work together to move the economy forward.

"It would be nice to see something positive come out of Washington and have people actually start working together to move this economy forward instead of fighting,'' he said. "The fighting that takes place in Washington just adds to the uncertainty that the American public feels. And we have to realize that the American public and businesses, in general, are still looking for something positive to come out of our governmental leaders."

Signorino warned that other countries will take advantage of conditions in the worldwide economy while the United States is fighting over policy.

"Gridlock in Washington does us no good," he said.

Mary Delach Leonard is a veteran journalist who joined the St. Louis Beacon staff in April 2008 after a 17-year career at the St. Louis Post-Dispatch, where she was a reporter and an editor in the features section. Her work has been cited for awards by the Missouri Associated Press Managing Editors, the Missouri Press Association and the Illinois Press Association. In 2010, the Bar Association of Metropolitan St. Louis honored her with a Spirit of Justice Award in recognition of her work on the housing crisis. Leonard began her newspaper career at the Belleville News-Democrat after earning a degree in mass communications from Southern Illinois University-Edwardsville, where she now serves as an adjunct faculty member. She is partial to pomeranians and Cardinals.