Job Growth Slow, Steady in August

The U.S. economy added a net 128,000 jobs in August, the government reported Friday, far below the average gains in the 1990s and much of last year. But such lackluster job growth could have a silver lining.

Although employers aren’t hiring as aggressively, they may not fire as aggressively either. That could lower the odds of a severe economic slowdown or recession, experts say.

Today’s slower but more stable hiring growth “reduces both inflation and business cycle risks,” said John Lonski, an economist with Moody’s Investors Service.

Unlike the late-1990s boom, “businesses are generally avoiding the types of speculative excesses whose correction often ultimately sparks a recession,” he said.

Give the credit to “just in time” hiring.

Improvements in technology and worker productivity, along with more adept use of temporary workers and outsourcing, have made businesses more efficient at managing their staffing levels, economists say.

“We see firms handling their workforce much more like inventories,” hiring temporary staff during boom times and cutting them back as business slows, said Jared Bernstein, an economist with the Economic Policy Institute in Washington. As a result, he said, the business cycle has moderated.

“We see much less of the traditional boom and bust,” Bernstein said.

Ted Kosloff typifies today’s stingier, but more stable, employer.

His company, Roosevelt Paper, a wholesale paper processor based in Mount Laurel, N.J., uses far fewer workers than it did in the 1990s -- but those workers are highly trained to use new money-saving paper-processing machinery, computer terminals and scanners to manage inventory and production.

Now, Kosloff said, he hires and fires much more cautiously, using more temporary workers and holding on to permanent staff.

“Some of our newer people are our best people. And it takes six months to a year to train a person before we know how good or bad they’re going to be,” he said.

Retail giant Wal-Mart Stores Inc., a pioneer of just-in-time inventory management, is applying the same technique to staffing. Store managers monitor customer demand and use continuously updated scheduling software to assign staff to the stores and shifts where they are most needed, spokesman Dan Fogleman said.

“We try to understand what are the shopping patterns at each individual store and match staffing levels to the time customers are choosing to shop,” Fogleman said.

The unemployment rate fell in August to 4.7%, the Labor Department reported Friday, down from 4.8% in July and near a five-year low.

The 128,000 net jobs added in August were in line with economists’ expectations and up from a revised 121,000 gain in July.

Schools, hospitals, financial firms, computer-design shops and construction companies were among the sectors recording job gains, while manufacturing, retailing and trucking were among those posting losses.

But average monthly private-sector payroll growth stands at 102,000 for the last five months -- almost half the monthly gains that were routine in the 1990s, economist Bernstein said. Employment is up only 1.9% since the current recovery began in late 2001, compared with a 7.1% increase during the 1990s, he said.

Although hiring is below par, so are layoffs. They fell to a six-year low of 37,178 in July, according to Chicago-based job placement firm Challenger, Gray & Christmas. Although layoffs usually pick up during the last four months of the year, Challenger expects this year’s total to fall below last year’s.

“Because there’s been less over-hiring this time ... that will act to keep layoffs down compared to previous periods,” the firm’s president, John Challenger, said.

The increased use of temporary staffing in various industries also may prevent layoffs after this year. Companies spent $97 billion on temporary staff this year, 8.2% more than last year, and they are expected to spend 7% more next year, said Barry Asin, executive vice president and chief analyst at Los Altos, Calif.-based Staffing Industry Analysts. Temporary staff make up 9% of the workforce at companies with more than 1,000 employees, about 2% of the total workforce, Asin said.

Doug Davidian learned to hire temporary staff after he made the mistake of over-hiring 14 years ago at his Fresno-based retail furniture business, California Business Furnishings. “It was real painful emotionally,” Davidian said. “Hiring too many too fast almost put the whole company at risk.”

As the company continued to grow, tripling sales annually, Davidian said he outsourced some recruiting and professional jobs and hired more temporary workers for projects. He also invested more in training his core staff of 150, who now work out of offices in Fresno, San Diego, Stockton, Las Vegas and Phoenix.

Airlines have held off on hiring by increasingly relying on technology such as airport check-in kiosks and Internet ticketing, said airline analyst Robert Mann of R.W. Mann & Co. in Port Washington, N.Y.

Last month, United Airlines announced plans to lay off 500 workers at a reservation center at Dulles International Airport outside Washington, but Mann said that number was low compared with previous layoffs. He does not expect to see major layoffs again at carriers such as Delta Air Lines Inc. and Northwest Airlines Corp., even as economic growth slows.

More efficiency, however, often means slower wage growth and more job insecurity for some.

Wage growth has lagged behind inflation for much of the current economic expansion, catching up to inflation only in recent months. Workers’ average hourly earnings edged up to $16.79 in August, the Labor Department reported Friday. That was up only 0.1% from July although 3.9% higher than a year earlier -- the biggest annual increase since June 2001.

Surveys also show rising worker anxiety. Although the number of Los Angeles-area workers whose employers announced layoffs fell by 3% last month, 23% of the area’s workers were worried that they might lose their jobs, 3% more than in July, according to the latest Hudson Employment Index, compiled by Rasmussen Reports, an independent research firm.

Kevin Krier, however, isn’t feeling more job insecurity, despite surviving a round of layoffs two years ago at Roosevelt Paper in New Jersey. He also saw part of his job eliminated when his paper-processing machine was recently upgraded.

But Krier, 29, has seniority, is trained to work in various parts of the automated plant and is called upon to train others. He bought a 2005 Subaru sedan last year and is house-hunting for himself and his 9-year-old daughter.

“I think I’m pretty comfortable right now,” he said. “I’m not worried about any layoff or anything.”

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molly.hennessy-fiske@latimes.com