290,000 Jobs

http://www.nytimes.com/2010/05/08/business/economy/08jobs.html?ref=business

Today's Department of Labor report put the most important lagging indicator of any recovery in the spotlight. Employers added 290,000 jobs in April. The median forecast from 20 respected economists was 188,000. The Labor Department also revised its figures from February and March to add 121,000 more jobs to the total for those two months.

The unemployment rate went back up from 9.7 to 9.9% but that reflects "discouraged workers" starting to look for work again. Temporary employment, which is always a precursor to full time job growth, continued its trend of the last several months: up again 26,000 jobs.

That 290,000 figure is very close to the figure Paul Krugman used last fall (300,000) as the rate the economy needed to create jobs, per month, to even begin to make up for the jobs lost during the Great Recession. Krugman's estimate was that a pace of 300,000 per month would have to be kept up for a period of 5 years!

An interesting report from the people at Indeed.com surfaced two weeks ago and it proved to be a sign of this good jobs news. Indeed.com reported that "job postings" had begun to surge. Indeed.com collects job postings from thousands of sources and had reported a 19% increase in March. The number of postings rose in 10 of 12 industry categories (the only category that "declined" was health care, which was one of the few bright spots during the recession). The industries that showed the biggest uptick in March openings were retail, up 42%; hospitality, 33%; and media and newspapers, 30%.

The recession masked a long-term trend that we have emphasized over recent years: a worker shortage caused by the continuing retirement of baby boomers. Combined studies by McKinsey Global, the BLS and other agencies have addressed this issue and the data is unassailable. The smartest employers are beginning to realize that they don't have, or won't have, people with the skills that they need. The thing about demographics is that it is not susceptible to quick change or adjustment: as China has found out, it may be their major problem.

Demographics could be behind a quick comeback on the job front. Sometimes major trends are the hardest to see. We'd guess that, over the next 5 years, shortages will get more obvious and jobs will get more available. The most vulnerable companies may well be the ones that maintain recession-era staffing while taking on recovery-era work.

We continue to hope for the best and agree with many economists and work-force consultants that demographics will hold sway in the not to distant future.