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Hiring, staff turnover aren't what they were before the recession

August 06, 2013|By Don Lee
  • A jobs sign is seen on the U.S. Chamber of Commerce building in Washington, D.C.
A jobs sign is seen on the U.S. Chamber of Commerce building in Washington,… (Saul Loeb / AFP / Getty Images )

WASHINGTON -- The July employment report last week showed that the labor market remains far from robust, but the weakness isn't just in the moderate number of new jobs being added by employers.

Many analysts already have noted that many of the 162,000 jobs created in July were in low-paying retail and restaurant work. It also matters how much of the net payroll gain came from an increase in new hires versus a reduction in the departure of existing workers.

Every month, a few million workers separate from their employers while several million others are brought on. It's the difference between these two that produces the monthly net job gain or loss.

"If the net is driven more by hiring rather than separations, that shows a healthier labor market," says economist Sophia Koropeckyj of Moody's Analytics.

Unfortunately, that's not been the case.

The Labor Department's monthly turnover report, the latest of which was released Tuesday, has been finding that the number of layoffs, quits and other separations is running well below the average before the recession. That means companies, some having cut to the bone, are holding onto more of their existing workers.

Yet hiring hasn't returned to anywhere near pre-recession levels. Since early 2012, hiring has ranged from 4.2 million to 4.5 million every month, but prior to the recession, gross new hires fluctuated between 5 million and 5.5 million monthly. 

The upshot is that the job market just isn't as dynamic as it was before the recession. Koropeckyj points to several factors: The aging workforce is clinging to its jobs; companies have implemented labor-saving technologies; and there aren't as many new start-ups adding as many workers as before.

Are these long-term factors? Koropeckyj thinks so.

"I really cannot see where we're going to get back to where we were before the recession," she says.

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