Thursday, Oct. 22, 2009

Stagnant job market seen until 2012

S.C.'s recession job losses have been so severe, state's recovery will take years, economists say

South Carolina might not recover the jobs lost in the recession until at least 2012, economic experts say.

The state has lost more than 105,000 jobs since employment peaked two years ago. That led to South Carolina's having the nation's fifth-largest unemployment rate, 11.6 percent, last month, according to data released Wednesday.

The last recession, in 2001, lasted just nine months, but South Carolina needed almost 5 1/2 years to recover the 91,000 jobs lost.

The current recession is in its 23rd month.

"The falling off the cliff seems to be over, but we're staying at the bottom of the ravine for a while," said Don Schunk, Coastal Carolina University economist.

Schunk doesn't see a recovery for at least three years. His prediction is based on how long it took to get out of the last recession.

Another economist gave a more dire prediction.

Sam McClary, labor market analyst for the S.C. Employment Security Commission, said the state would need to add about 2,000 jobs a month every month for five years to get back lost jobs.

"We dug ourselves in such a hole, it's hard to recover from this," McClary said.

College of Charleston economist Frank Hefner said he's unsure what will be the "engine of growth" for the recovery in South Carolina. It won't be state government hiring because tax revenues have dropped, he said. And it won't be construction because bank credit is tight and building inventory is high, he added.

"The numbers could be flat for a long time," Hefner said.

Lawmakers will return to the State House on Tuesday to consider a benefits extension that will be paid with federal money.

South Carolina did add 2,500 jobs in September over August as schools added seasonal employees, according to the S.C. Employment Security Commission. But the state lost jobs over the summer and has 68,700 fewer jobs than a year ago.

"We're going to have some ups and down," McClary said. "We're still losing construction jobs, and retail trade is going nowhere, and manufacturing is still dropping."

Last month, South Carolina's jobless rate rose slightly to 11.6 percent, which ended a two-month slide economists attributed to more people giving up on the job search.

The state's jobless rate peaked at an all-time high of 12.1 percent in June before falling to a revised 11.4 percent in August. U.S. unemployment rate was 9.8 percent last month.

While the economy appears to be stabilizing after the steep falloff last year, it's masking an ongoing weakness in employment, Schunk said. The state jobless rate was 7.5 percent a year ago and 5.8 percent when the recession began in December 2007.

"We're now moving sideways at high levels of unemployment," he said. "That will continue to put pressure on households, who we rely on to pull us out of the recession."

That does not bode well for the upcoming holiday shopping season. With industry groups predicting essentially flat holiday sales over last year, economists don't expect a big boost in seasonal hiring.

"Retailers are very reluctant to hire right now," McClary said.

Not much should be taken away from the recent ups and downs of unemployment rates, Hefner said. A tenth of one percentage point change can be a statistical error.

Hefner said he's looking for a consistent, longer trend with the rates remaining up or down over several months.

"We're so hungry for good news that we want to see some kind of indicator for a turnaround," he said. "People want to see that we've reached the bottom and that maybe companies can hire someone."

Meanwhile, state lawmakers will return to Columbia for a special session to consider a law change that would allow 20 more weeks of federal unemployment benefits.

About 7,000 people lost the benefit Saturday. And an additional 5,900 exhausted the benefit this year and are owed another seven weeks of payments. The original extension lasted just 13 weeks.

Workers now can get up to 59 weeks of unemployment benefits between state and federal programs.

If approved by lawmakers next week, the extension would bring the potential total length of benefits to 79 weeks - or nearly 1 1/2 years. But that extra funding ends Dec. 31 unless extended by Congress.

The federal government has covered the state's portion of the extension.

Congress also is discussing a separate extension that could add 13 more weeks - which, if approved, could mean benefits in South Carolina would last up to 92 weeks.

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