Layoffs become rarer even with unemployment high

WASHINGTON (AP) - The U.S. labor force has been split into two groups: the relieved and the desperate.

If you have a job, you can exhale; you're less likely to lose it than at any point in at least 14 years.

If you're unemployed? Good luck. Finding a job remains a struggle 20 months after the recession technically ended. Employers won't likely step up hiring until they feel more confident about the economy.

A result is that people who are unemployed are staying so for longer periods. Of the 13.9 million Americans the government says were unemployed last month, about 1.8 million had been without work for at least 99 weeks - essentially two years. That's nearly double the number in January 2010.

Yet the deep job cuts of the recession have long since ended. In January, companies announced plans to trim fewer than 39,000 jobs, according to outplacement firm Challenger, Gray & Christmas. That was 46 percent fewer than a year earlier. More strikingly, it was the fewest number of planned layoffs in January since Challenger began keeping track in 1993. For all of 2010, planned layoffs hit a 13-year low.

Eventually, consumer spending will rise high enough that companies will need to accelerate hiring to keep up with demand. In the meantime, a fading fear of layoffs is likely helping the economy: It's encouraging consumers who have jobs to spend more.

"The fact you know that the paycheck is going to be coming in now and for the foreseeable future gives you permission to do some extra spending," says John Challenger, CEO of Challenger.

Retailers, in particular, have stopped shedding workers. After the best holiday shopping season in four years, stores cut fewer than 5,800 jobs last month. That's only about one-third the number of a year earlier. And it's far fewer than the nearly 54,000 in January 2009 at the depths of the recession.

Yet employers still aren't ready to start hiring aggressively. A government survey of business payrolls released Friday showed a net gain of only 36,000 jobs in January - barely one-fourth the number needed just to keep pace with population growth. Harsh winter weather helped explain the weak hiring. But not entirely.

A bigger factor is that companies have become more productive. After slashing jobs during the recession, they discovered they could produce the same, or more, with smaller staffs.

A company that might have had a half-dozen people working on business development, for instance, might now have three, says Bobbi Moss, vice president of executive recruiters MRINetwork Govig & Associates in Scottsdale, Ariz.

Businesses have created an average of just 82,000 net jobs each month over the past year. That's fewer than half the number a strong economy would be expected to create. It's why so many unemployed people have been left stranded, unable for many months to land jobs.

An average of 4.6 unemployed people are competing for each job opening, the government says. In a healthy job market, no more than two people would be vying for each opening.