Firms Put Hiring in Holding Pattern

Employers across the country have frozen jobs and curtailed hiring since Sept. 11, putting an end to the ease of finding new jobs that has cushioned the economy from this year’s mounting layoffs.

Many employers, even those not laying off workers, show little interest in filling vacancies any time soon, according to business operators, job hunters, recruiters and staffing agencies.

Some security and defense-related firms are hiring, and others, such as home builders, still are going strong. But, like consumers, most employers are uncertain about the war on terrorism and its effects on the economy.

“The first implication of that kind of uncertainty is the freeze--freeze hiring decisions and freeze capital spending,” said Lynn Reaser, chief economist for St. Louis-based Banc of America Capital Management. “That is the natural tendency of business--freeze decisions.”

A survey released this week by the National Federation of Independent Business suggested that hiring curbs were widespread among small-business owners, who make up 99% of all employers. In the survey, these employers reported scaling back hiring plans in the wake of the attacks to their lowest levels since 1993.

“We’ve taken a three-week hiatus,” said Frank Moran, president of Team-One Staffing Services Inc., a contract-labor firm in Los Angeles. “People just got spooked and everybody’s hesitating.”

Some economists expect employers to remain cautious about hiring for some time.

“No one wants to take on employees without knowing what’s going to happen,” said Sung Won Sohn, chief economist for Wells Fargo & Co. in Minneapolis. “It’s not like buying a pair of shoes. When you hire an employee, you are making a long-term commitment.”

Though plans by battered airlines and related businesses to cut more than 200,000 jobs have dominated the news, a hiring slowdown is more of a stealth phenomenon that is not usually publicly announced and is not directly measured by the government.

Yet a drop in hiring is no less troubling for the economy. Through much of the recent economic slowdown, the creation of jobs and filling of vacancies have mitigated the sting of widespread layoffs. This hiring has been a key reason the unemployment rate remained at historic lows through August.

As late as July, job gains outpaced losses, and more Americans were working--481,000 more--than a year earlier, when most sectors still appeared to be booming.

But in August, job losses eclipsed gains by about 1 million and the number of working Americans fell to 134.4 million, the fewest since November 1999. The events of Sept. 11 appear to have exacerbated that trend.

“We focus so much on layoffs but the other piece is, can these people find other jobs and can people entering the work force for the first time find jobs?” Reaser said. “That’s what’s looking worse now.”

Before the attacks, the unemployment rate was expected to peak at about 5.5% by early summer 2002, said Mark Zandi, chief economist at Economy.com. Now, as a result of layoffs and slower hiring, he said, the jobless rate may not peak until next fall and could go as high as 6%.

“In an effort to maintain sales, [businesses] are going to have to cut prices,” Zandi said. “That’s going to undermine profits and margins and the willingness of businesses to expand and hire people.”

Businesses Feeling ‘a Ripple Effect’

Although the September unemployment rate that the government is releasing today is expected to rise, the data were collected too early to reflect the effect of the attacks.

Some employers, without declaring a formal hiring moratorium, are taking a wait-and-see approach and leaving some jobs open indefinitely.

Lonnie Kane, president of Vernon-based Karen Kane Inc., which employs 175 people, said people at the women’s sportswear maker were too shocked to think about hiring the week of the attacks.

“I don’t think we intentionally put anything off,” he said. “But things got put off. It’s not like we sat down and had a meeting. I think people said, ‘I really don’t want to interview’ ” job applicants.

Since then, Kane said, he has hired a security guard but will leave open a position for a New York-based department store sales-account executive.

Sir Michael’s, a limousine and party-rental service in Eagle Rock, saw business drop when the Latin Grammys were canceled, the Emmys postponed and travelers stopped calling for rides to airports. As a result, owner Michael Nogueira is turning away drivers who call him for jobs, and he has had to cut the hours of his regular crew by almost half.

“It has a ripple effect for everybody,” Nogueira said. “And we still don’t know what we’re up against.”

“I had clients who had interviews scheduled, and they just got canceled,” said Robin Ryan, a career counselor in Seattle. “Then they were told, ‘We don’t know if we are going to be hiring. We don’t know if we are going to have the job or not.’ ”

Few Jobs in Typically Strong Hiring Period

As a human resources coordinator, Debra Drucker was well aware of the worsening employment market and figured it would be a little harder to find a job when she lost hers in late August. Then came the attacks.

“That whole week was a goner,” the Los Feliz resident said. “No one could work. No one could think about work. Even the [employment] agencies didn’t want to pressure clients. So that whole week was just a dead week.”

And it hasn’t gotten better for Drucker, who has signed up with a dozen employment agencies in an effort to improve her chances. She’s been on interviews for three different jobs, but she has been told that none has been filled.

Job seekers have surged into the Verdugo Job Center, a government-run employment agency in Glendale. But new job postings have fallen from 75 a week before Sept. 11 to fewer than 40, said Larby Ablouh, an employment specialist at the center.

“This is usually our strongest hiring period, the end of year, and it’s been very, very slow,” he said.

Ablouh sent the resumes of five candidates he said were highly qualified to a business seeking an administrative assistant three weeks ago. Under normal circumstances, Ablouh said, he is sure he would have placed one of them within a few days. But the woman filling the job has yet to decide.

“She said, ‘They are all wonderful,’ ” Ablouh said. “But she is taking her time, and that’s the issue. [Hiring] was slow and it even got much, much slower.”

Mary Lee Berglund, president of B&B; Media Services Inc., a Los Angeles recruiter for advertising agencies, a sector hit hard early in this slowdown, said she noticed a slight increase in hiring in the weeks before Sept. 11.

“I was starting to think the fourth quarter might be a little better, and then the 11th just stopped all that,” she said.