Hesitant to Rehire : Recession-Shy Employers Now Turning to Overtime, Temps


Seventy-five workers got pink slips at Swift-Cor Engineering in Gardena after hard times hammered the metal parts manufacturing company two years ago. But even though business has bounced back for the firm, it isn't refilling all of the old jobs.

Instead, Swift-Cor is stretching its 225-person work force by putting many of its employees on overtime. It also copes with short-term crunches by using assembly workers and clerks supplied by a temporary help agency.

After going through the agony of layoffs, "we'll be very slow to hire" permanent staffers from now on, Swift-Cor Chairman Ralph D. Scriba said.

Despite the mounting evidence of a reawakening national economy--along with the formal declaration Tuesday by a panel of economists that the U.S. recession is long over--lots of employers remain skittish about hiring. As a result, many economists predict that it will take at least several more months of improved business before firms begin doing enough hiring to significantly thin America's bulging ranks of under-employed and unemployed workers.

Swift-Cor and other slow-to-hire employers are following a time-honored practice. Firms traditionally have delayed rebuilding or expanding their staffs aggressively until they gained confidence that a turnaround is for real.

But this time, labor market analysts say, hiring may take even longer than usual to heat up because of such factors as the rash of painful corporate restructurings still fresh in many employers' memories and the gradual nature of the apparent recovery underway.

"Employers that are only now finishing their downsizing are not going to turn around 180 degrees on a dime and start hiring like crazy," said Ken Goldstein, an economist with the Conference Board, a business research group in New York.

Goldstein said he is pleased about the many signs that the economy is rebounding, "but in terms of impact on the labor market, we've got an awfully long road to recovery."

Not everyone, to be sure, is putting off hiring. A survey of 15,000 employers released last month by Manpower Inc., the giant temporary help firm, found that hiring prospects for early 1993 are the best in two years. Meanwhile, the U.S. jobless rate continued its slow decline in November, edging down to 7.2%.

Still, most of the decline in the jobless rate from a midyear peak of 7.8% stems not from job creation but from people dropping out of the job market--apparently, in many cases, because they were discouraged about their prospects. Consequently, when employment prospects start looking better and discouraged workers count themselves as part of the labor force again, the jobless rate is likely to go back up for awhile.

Audrey Freedman, a labor economist based in New York, estimates that when the labor force resumes a normal growth pattern, 150,000 jobs will have to be added monthly just to keep the unemployment rate from rising.

Freedman, who led a UCLA-based panel of executives and academics that issued a 1993 employment forecast this month, predicted that the economy won't start producing jobs at that rate again until summer at the earliest. Last month, the nation added a higher than expected 105,000 jobs to its payrolls, but the total included 45,000 short-lived jobs for poll workers.

In California, where the recession hit later but harder than most of the country, the short-term prospects for the job market look particularly weak. Economists with the UCLA Business Forecasting Project issued a report last week predicting that non-farm employment in the state will show a decline of 2.3% this year and 1.1% next year before turning up in 1994 with a 1.5% increase.

Even in businesses such as the supermarket industry, where staffing levels are tied closely to sales volumes, employers say hiring won't increase quickly. For example, Vons, the biggest supermarket chain in Southern California, has cut workers' hours during the recession and will restore those hours before it adds staff to handle increased business.

Improved technology will also play a role in curbing hiring at firms such as Vons, which invested heavily in labor-saving equipment even through the recession. The company's capital spending this year is at a record high.

Vons is phasing in computer technology that allows invoices on food deliveries to be submitted electronically, eliminating time-consuming paperwork. Delivery crews equipped with hand-held computers feed the invoice information directly into Vons' computer system, using hookups at the company's stores.

The chain is also re-equipping its stores' checkout lanes with scanning systems that read bar codes from various angles. The intent is to cut down on a common supermarket phenomenon--merchandise that has to be whisked past a scanner several times before the price finally registers. As a result, checkout lines are expected to move faster, and cashiers should be able to do their jobs more quickly.

Even when hiring picks up at some companies, many of the new jobs will be short-term positions filled through temporary help agencies. Scriba, chairman of Swift-Cor, said he began using temporary help more over the last year and has found it particularly helpful in his business, which frequently alternates between busy and slow periods.

In past years, Scriba said, screening job applicants was time-consuming and expensive.

Also, he said, employees who were laid off during downturns filed claims for workers' compensation benefits, driving up the company's insurance costs. When Swift-Cor laid off the 75 employees two years ago, about one-third filed for workers' compensation. But with temporary workers, the temp agencies themselves handle workers' compensation--and for a variety of reasons, claims are less frequent.

Scriba said the company also has been successful in filling permanent jobs from the ranks of the temporary workers, because supervisors have had the chance "to try before they buy."

Still, permanent jobs will come back slowly. The company's plan is that for every 10% increase in sales, it will increase its staff no more than 5% to 6%.

Due to competitive pressures, he said, "we just know we have to get more efficient . . . We learned from the recession."

Job Growth

The U.S. economy has resumed adding jobs this year, but at a far slower rate than in the late 1980s. And even though job creation is expected to pick up next year, experts predict employment will grow far more slowly than it did after the 1981-82 recession.

Average monthly change in payroll jobs

'83: 290,583

'92*: 43,818

Source: U.S. Bureau of Labor Statistics

* through Novemeber

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