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Job Growth: Why US Remains Stuck in Neutral

Friday, 6 Jul 2012 | 12:51 PM ET

After months of what looked like an easier road for the unemployed, American job seekers seem to be stuck in neutral, if not heading in reverse.

Career Fair
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Career Fair

With the economy slowing down, unemployment in the U.S. rose to 8.2 percent in May and stayed that way for June as the number of people looking for work increased and fewer new jobs were created.

What the latest figures mean, say hiring experts, is that getting the U.S. back to work remains a slow and painful process.

"Companies are hiring all the time, but it's mainly just replacements," says Marc Cenedella, CEO and founder of TheLadders, a job recruiting service. "We're not seeing a substantial amount of new positions. It's worrisome to say the least."

Cenedella is just one of the executives attending the annual Society for Human Resource Management Conference in Atlanta, Georgia. It's a three-day confab at the end of June for HR and recruiting personnel to discuss hiring practices and the state of employment.

"There's a lot to worry about. We've got a slow economy and the crisis in Europe. There's little room for optimism when it comes to jobs," Cenedella says.

The lack of job growth in the U.S. should not be a surprise. Even before the Great Recession of 2007-2009, the number of jobs created tapered off significantly from the Internet boom in the 1990s, leaving the economy very little cushion when the downturn slammed the country with the loss of some 7.5 million jobs.

"You can say we've been in a job slump for many years," says Shafiq Lokhandwala, CEO of NuView Systems, a provider of HR and payroll systems. "Jobs went overseas, companies were doing more with less, positions were filled with temp workers. What we have, and have had, is the new normal for employment."

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The new normal includes a divide that splits the jobless into different groups, says Bryan Johanson, an executive vice president at The Adler Group, an HR strategy and management firm.

"There are two economies with the skilled and educated college degree and then the less skilled," Johanson explains. "It's the less-skilled that are really having problems in terms of job growth."

The numbers show that as bad as the unemployment rate is for college graduates—around 19.1 percent—the jobless rate for high school graduates is near 54 percent.

And the skills gap could get worse. Nearly 17 percent of high school graduates had no job or were not enrolled in college in 2011, up from 13.7 in 2007, according to the Economic Policy Institute.

Even with a college degree, American workers might not be prepared for work, says Justin Moore, CEO of Axcient, an IT data protection solutions firm in Mountain View, California.

"There's less focus on teaching students the fundamentals of engineering and computer systems," argues Moore. "For companies like us that have heavy systems and requirements, it makes it difficult to hire young engineers."

The lack of training reaches down in to the basics, says Mark Schmit, director of research at the Society for Human Resource Management.

"Many kids are missing simple reading and writing as well as elementary math skills when they come out of high school and even college," Schmit explains. "We've got to do a better job of educating our kids if they're going to get work."

Despite the dim outlook, there are job opportunities for the right candidate.

The shortage of high tech workers has created a demand for the right skills and a jobless rate for the sector at half the national rate. With more seniors retiring than ever before, health care related positions are expected to grow at a rate of 35 percent in the next eight years, according to the Bureau of Labor Statistics. Professional and business services are also expected to see job growth as well as green energy sectors and even construction.

Areas of job growth in US

Many areas of the country are seeing fewer job losses if not some minimal job growth.Some 32 states, including Minnesota as well as Texas, New Hampshire and New Mexico are below the national average on jobless rates, according to the BLS. Ohio has seen its rate drop 10 months in a row to a current 7.3 percent.

If the projections of job growth don't match the current reality, it shows the instability of the moment and beyond, say experts.

Coupled with the sluggish economy are upcoming political battles: ending or extending the Bush era tax cuts, scheduled payroll tax increases, as well as another showdown over the government's ability to borrow money.

"Corporations are sitting on their profits because there's uncertainty about the presidential election and how that will play out with taxes and regulations," Marc Cenedella argues. "It will probably take until next year to see which way companies go when it comes to hiring."

Even if hot button issues are resolved to corporate America's liking, it will take the business community itself to come up with a way to create jobs, contends Bryan Johanson.

"We need more innovation and experimentation like we had in the mid- to late 1990s with the Internet boom," explains Johanson, who says he is optimistic about the job picture. "Without that, it's going to be hard to have any kind of high job growth."

But until the 'next big thing' hits, or businesses feel less stress about the future—or a combination of the two—American job seekers will have to slug it out, says Shafiq Lokhandwala.

"Americans are not lazy or complacent," Lokhandwala says. "This country has a lot of pride in work and always has. Things are stagnant right now but I expect that to get better. It's just going to take time."