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New Hires Get Less Pay As Jobs Remain Scarce

With nearly 14 million Americans unemployed, a growing number of people are competing for a dwindling number of job openings, allowing some employers to drive down pay and benefits for new hires.

AP

And the latest government figures show competition for jobs intensified in the first few months of 2009.

Employers are laying off workers and taking other steps to cut costs as they grapple with the recession, the longest since the Great Depression.

Some companies also are reducing the pay and benefits for new employees, according to a new survey released by the Society for Human Resource Management.

Nearly 15 percent of service-sector companies reduced pay and benefits for new hires in April compared with March, the survey found. Only 2 percent increased such compensation.

Until this spring, far more service-industry employers—such as in retail, hotel and financial services industries—had boosted rather than reduced pay for new workers, the group said. About 75 percent of Americans work in services.

Jennifer Schramm, manager of workplace trends and forecasting for the society, said companies have concluded that layoffs and other cost-cutting measures haven't gone far enough.

Employers are having an easier time offering lower pay as more unemployed workers chase fewer jobs. The number of job openings nationwide fell to 2.7 million in March, down from 3 million in February and 4 million a year ago, the Labor Department reported Tuesday. It's the lowest number in the eight years the department has tracked job openings.

It means roughly five workers are competing, on average, for each opening, compared with less than two for each job about a year ago.

Openings in education and health services fell to 558,000 from 589,000, the report said, while openings for manufacturing jobs dropped to 123,000 from 141,000. Openings in leisure and hospitality fell to 296,000 from 332,000.

The figures come after the department said Friday that the number of unemployed Americans rose to 13.7 million in April. And the jobless rate reached 8.9 percent, the highest in more than 25 years.

Other recent reports indicate that hiring hasn't picked up since the department gathered the job openings data in March.

"We haven't seen a big uptick yet" in new job openings, said Joanie Ruge, senior vice president at Adecco Group North America, a human resources firm that places mostly temporary and contract workers.

Without new hiring, the unemployment rate will rise further. In part, that's because many people who were discouraged and stopped looking for work at the depths of a recession customarily begin looking again once a recovery begins. If jobs aren't available, new job seekers join the pool of unemployed workers.

The private Conference Board said this week that its Employment Trends Index dipped 0.7 percent in April, a smaller decline than in recent months but still a sign of labor market weakness.

Your Job, Your Life | A CNBC Special Report
Your Job, Your Life | A CNBC Special Report

Gad Levanon, senior economist for the Conference Board, said the job market has improved from earlier this year. But he said he doesn't expect openings to increase for several more months.

More layoffs were announced in the past week. DuPont said it will cut 2,000 jobs, while Microsoft said it was starting thousands of the 5,000 job cuts it announced earlier this year and left the door open to even more.

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