Getting back to work: a jobless recovery would have consequences for the state's largest employers--and the entire economy.

• Author: Martin, Edward
• Position: FEATURE - Company overview

They moved to Clayton from Indiana two years ago, attracted by, among other things, the region's strong economy and how the Johnston County town of about 14,000 maintained its village character--a downtown of quaint shops, a drug store established in 1918-despite growing cul-de-sac developments populated by commuters to Raleigh and Research Triangle Park. But Paula and Richard Schwarze quickly saw changes among their neighbors. "There were quite a few layoffs, and it seems they were long-term, higher-salaried employees--people who had been with companies 20 or 30 years," she says.

Then her husband lost his management job with a grocery chain. She had worked in real-estate sales and for nonprofits, including a chamber of commerce, in Indiana, so she began looking for part-time work. Last February, she drove to a three-story building just north of downtown Raleigh. The notice had said there would be a job fair--Manpower Temporary Services was recruiting 370 people for a national mortgage company--but what she saw surprised her. More than 1,000 job seekers stood in line that day, clutching their resumes. "We've got a pretty good-size building, so we were able to accommodate them," says Michael Doyle, Manpower regional director. "But we had to call in the police to direct traffic."

Among the applicants were some of Schwarze's neighbors. "We've seen some who've lost jobs become employed again but at lesser salaries," says Schwarze, 54, who since has signed up for temp work. "Wives have gone back to work because their husbands' salaries have been cut significantly. People are settling for less than they've been making, and some are doing things they don't want to because that's all that's available." They may be part of the new norm: an ephemeral, on-demand labor market of lower wages and lowered expectations.

Economists say the nation has started rebounding from the recession that began in December 2007, but recovery hasn't returned the jobs that were lost. North Carolina's unemployment rate has stubbornly hovered at about 11% for nearly a year. Through November, the state had a net loss of 250,000 jobs since the recession began--a 6% drop. Even those on Business North Carolina's annual list of the 100 largest private-sector employers have been affected. Six of the top 10 cut jobs in the state during the past year. The three that increased employment were health-care providers, at least in part.

Jobless recoveries aren't new, says economist John Coleman, a professor at Duke University's Fuqua School of Business. The two previous recessions, starting in 1990 and 2001, were like that, with hiring not resuming in earnest until about 18 months after the gross domestic product began rebounding. "That indicates that by no means is what we're experiencing now a permanent rise in the unemployment rate."

But that also doesn't preclude dramatic changes for the state's more than 4 million workers. Turnover is likely to be higher, because of increased use of contract employees and temps. Benefits, now not so necessary to attract the best, are shrinking like cheap jeans. Per-unit labor cost is likely to go down as automation and technology--grocery stores' computerized self-service checkouts linked to automated inventory management are one example--reduce demand for workers. North Carolina might already be seeing the results.

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