LOS ANGELES—The economy roared last quarter, and so did Falcon Plastics Inc.
A family owned firm in the eastern South Dakota city of Brookings, Falcon posted record sales in September. Yet there's no impulse to celebrate, no rush to hire. The bad times are still too vivid.
Multiply Falcon's situation by tens of thousands of other companies, and a picture begins to develop of an economy climbing a wall of worry.
Last month, the U.S. Labor Department in Washington said that employers added a net 126,000 payroll jobs in October. In all, the economy has added 286,000 positions over the last three months -- the best showing since early 2001.
But 2.4 million more jobs would be needed to regain all the ground lost since March 2001, when the last recession began. When, or even if, those positions will come back is far from clear.
Here's the problem: Many companies like the notion of a jobless recovery. The leaner they can keep their U.S. payrolls -- by using overtime, automating the production process and outsourcing jobs overseas -- the higher their profits.
The murky hiring picture affects not only the 8.8 million unemployed but the 1.6 million who want a job but aren't actively looking for work. It affects millions more who want a full-time job but must get by with part-time work. And it weighs on the more than 130 million employed.
"The greatest single concern people appear to have about the economy is jobs," investment house Fred Alger Management Inc. said in its November market review. "We have companies and an economy that can shift gears quickly, but not the kind of job creation and job security that people understandably seek."
'Still very cautious'
For Falcon, as for many companies, the 2001 downturn was swift and harsh. Annual sales tumbled from $20 million to $14 million. The 305 employees shrank to 175. "Sometimes," Bender said, "you have to cut off your arm to save your life."
The emergency surgery was a success. For the fiscal year that ends in April, Falcon expects again to hit sales of $20 million. But the payroll is back to only 200 workers. Any further growth, Bender said, "will be incremental. We're still very cautious."
So, too, are consumers. Although the economy expanded during the third quarter at its fastest rate in 19 years, people's confidence in the future remains "middling," noted Richard Curtin, who directs the University of Michigan's monthly consumer survey. The tenuous job situation is a big reason.
"It used to be understood that when business weakened, layoffs went up. When it improved, people were called back to do the same jobs at the same employers," Curtin said. "Now, if people lose their jobs, they have to find new skills and a new job at a new employer. It's a more daunting challenge."
Layoffs amid profits
It's one that many stand to face, even as the economy picks up steam. The job placement firm of Challenger, Gray & Christmas in Chicago reported that planned layoffs at U.S. firms were 171,874 in October, more than double September's total and the highest in a year.
Duke Energy Co. said it would eliminate 8 percent of its global work force, or 2,000 jobs. Sony Corp. will cut several thousand U.S. jobs as part of a major restructuring. Tyco International Ltd. said it would do away with 7,200 jobs, or 3 percent of its labor force.
In some cases, the cuts were accompanied by solid earnings reports. Boise Cascade Corp. said sales increased 9 percent in the third quarter and profit nearly quadrupled. But the wood-products firm is continuing layoffs, which have reduced the number of employees by 460 this year and will lop off an additional 90 during the fourth quarter.
Electronic Data Systems Corp. fulfilled Wall Street's expectations for the third quarter, but the computer services company nonetheless announced it would cut an additional 2,500 jobs in its third layoff in a year.