mchen@heraldsun.com; 419-6636
DURHAM -- This recession has affected workers of all kinds, from the corporate manager with decades of experience to temp workers barely scraping by.
Some of those workers have gone back to school and launched their own businesses, charted a new path for themselves that they hope will lead to more stable work. Others have sought and received help from organizations with new federally funded programs.
But where are the jobs? When will Durham, the Triangle and the rest of the country regain the jobs we've lost?
Unfortunately, because this has been the longest, deepest recession seen in this country since perhaps the Great Depression, business leaders and experts predict it will take a long recovery to get the economy fully back on track.
John Quinterno, an economic and social policy analyst with South by North Strategies Ltd. in Chapel Hill, projects that if the economy grew at 0.17 percent, which was the average rate of growth of the economy as it recovered from the past two recessions, it would take until fall of 2012 to get payroll numbers back to the level they were in December 2007 -- the start of this recession.
"If you're looking at how we replace not only the jobs we lost but the ones we should've created due to population growth ... then I think we'll be looking at 2013-ish for the recovery," Quinterno said.
The economy has seen some gains, Quinterno added, "but overall, we've been running in place since July."
Compounding the problem is the issue of underemployment. Many workers now are employed part time when they previously had full-time jobs. Other workers have been jobless for so long, they've become discouraged, stopped looking for jobs and dropped out of the labor force. Official estimates usually define the "unemployed" as the jobless who are still looking for work.
The Bureau of Labor Statistics began following state underemployment rates last year. In North Carolina, the state posted in 2009 an annual average of 10.4 percent official unemployment rate. Taking into account underemployment, however, the state's jobless figure balloons up to 17.7 percent.
Business leaders and economic experts say the root of the problem with unemployment has to do with the greater financial system and the inability of small- and medium-sized businesses, the kinds of businesses that could hire workers, to get loans.
Rob Teer of Teer Associates, whose family has been in the construction and real estate industries in North Carolina since before the Great Depression, said this is the worst recession he has experienced since he started working in 1967.
Government programs have helped somewhat, Teer said, such as $4.5 million from the stimulus package to replace runway lights at Raleigh-Durham International Airport. But the job market still isn't getting any better. Teer's own firm has cut back on employing contractors and laid off one of just six full-time workers.
Teer said he also believes the primary problem is credit. "You can't get credit, so nobody is doing anything," he said. "If you have an idea, but you can't get credit to do the idea, you can't hire people and it becomes a vicious cycle."
President Barack Obama has been shifting more attention to small businesses and called on Congress recently to create a Small Business Lending Fund.
Under the proposal unveiled recently, $30 billion in TARP funds would be transferred to a new program to support small-business lending that complements other Small Business Administration initiatives, such as support for higher SBA loan limits and extended Recovery Act provisions for higher loan guarantees and temporary fee eliminations.
It also would provide tax cuts to encourage small businesses to invest, hire and raise their workers' salaries. The fund would be allocated through small and medium-sized banks with assets under $10 billion.
Campbell Harvey, an international business professor at Duke University who has been following job market trends closely on his blog, said that while it's good the president is starting to focus more on small businesses, more needs to be done to fix the root of the problem.
"The most important thing in my opinion, is to get the financial system working for small and medium-sized businesses," he said. "You can't fix this problem by incenting certain community banks to give money to certain small businesses. The fundamental problem is that you've got to cleanse our financial system."
On his blog, Harvey has stated that the financial system needs to be completely overhauled. Weak banks need to be closed and the regulatory system needs to be streamlined.
"As a result of the historical maze of changing regulations, we have over 7,000 banks. There is no economic reason for 7,000 banks. It is inefficient both for the bank in providing the lowest cost and highest quality services to their customers. It is a nightmare to regulate," he wrote in a recent post.
"What the president has proposed is a Band-Aid. You're putting a Band-Aid on a wound that has a shrapnel in it," Harvey said. "But the main problem is that we've got a banking system that has housing assets on their books that are worth way more than their true value. We somehow need to purge that."
Harvey proposes centralizing regulation, encouraging mergers between small banks and making banks reveal the real value of their troubled assets and setting up an entity to house these troubled assets of failed institutions.
"The financial system is not healthy until we greatly reduce the troubled loans on the balance sheets of our financial institutions," he wrote.
There are some glimmers that the job market is making fits and starts in adding jobs.
In November, 7,000 jobs were added nationally, the first month in nearly two years that jobs were gained nationwide instead of lost. Last week's new set of numbers from the Bureau of Labor Statistics showed more hopeful signs: Manufacturing added 11,000 jobs in January, the first increase since November 2007. The number of temporary workers also grew by 52,000.
Locally, according to temp agency Manpower, the proportion of temp-to-permanent hiring dropped down to 20 percent to 25 percent in 2009, a significant decrease from the normal levels of 40 percent to 45 percent. Spokesman Michael Doyle said that if January is any indication, temp-to-permanent hiring could rebound to normal levels this year.
"I feel like we're a little bit better, but it's going to be slow," Doyle said, projecting that it won't be until the third or fourth quarter of 2010 that the area will feel the full release of the recession and growth will begin.
Teer said that from his perspective, the market mostly needs time to correct itself.
"You can either call it the whiplash effect or the boomerang effect," he said. "They went so wild that they hung us out to dry, so now the government is pulling it back in."
"It's going to take a while to shake out," he added. "These government programs don't really get out and make the difference very quickly. I think it's something that the economy will have to work out for itself."
