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Employment won't increase until economic recovery is kickstarted

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By Thomas Olson and Joe Napsha
Sunday, Sept. 4, 2011

Candice Zawoiski of Friendship has searched for a teaching position for a year and hasn't found any kind of full-time job for two years.

"Because of all the budget cuts to education, I can't get a job," said Zawoiski, 32, who holds a master's degree in elementary education. "And I know I'm not the only one. It's a huge problem."

It's hardly limited to the education field or to the Pittsburgh region.

Policymakers are scrambling for ways to add jobs and energize the anemic economic recovery. President Obama is scheduled to lay out job-creating initiatives to a joint session of Congress on Thursday evening. Analysts expect he'll propose creating a fund for public works projects, extending payroll tax cuts beyond year-end, putting money toward worker retraining programs and providing temporary tax cuts to companies that hire people.

Yet hiring is not likely to pick up anytime soon, cautions Tom Henschke, president of SMC Business Councils in Churchill, a trade group that represents 1,500 small- and medium-sized firms in the region.

"The elements that need to exist just aren't present," Henschke said, citing slack demand for goods and services, tight credit and a lack of business and consumer confidence.

Experts say the main sources of new jobs in Western Pennsylvania are likely to be in the health care, education and natural gas industries and the spinoff jobs they bring in accounting, finance and information technology -- the same sources of most recent job growth here.

The nation has 6.8 million fewer jobs than when the Great Recession started in December 2007, according to the Economic Policy Institute in Washington. To keep up with growth in the working-age population since then, 4.3 million new jobs were needed. At that rate, it would take an average 400,000 new jobs per month to fill the gap by 2014.

On Friday, the government reported that zero jobs were created in August. It was the worst report in nearly a year, raising fears of another recession. The last one technically ended in June 2009.

"Unemployment has affected every group of workers," said institute President Lawrence Mishel. "Those with college degrees have double the unemployment rate, and young college grads are hurt the most."

"If Americans want to return to full employment, which means unemployment would be around 5 percent, then they'll have to wait until 2018 if employers are infused with a new confidence and began hiring at the same average rate they did during the 2003-2007 expansion -- 176,000 jobs a month. But 176,000 jobs a month is a far cry from the zero new jobs reported Friday," the Heritage Foundation, a conservative think tank in Washington, said in a statement.

Cenaya Crawford of the North Side got an associate's degree in business management four years ago but has searched fruitlessly for work since June. That's when she lost her job as a news store supervisor at Pittsburgh International Airport after the Hudson Group put her on weekends, when buses there run infrequently.

"I'm either too educated or not educated enough," said Crawford, 23. "I've been living off my savings, and my bank account is almost gone."

The nonpartisan Congressional Budget Office forecasts the nation's unemployment rate of 9.1 percent will fall to 8.9 percent in the October-December quarter, then to 8.5 percent a year later. But the agency projects the rate will remain above 8 percent until at least 2014, a longer span of high unemployment than during the deep recession of the early 1980s.

As if high unemployment is not crippling enough, the underemployment rate -- people working in jobs below their skill levels or for lower wages -- stands at 16.1 percent, according to the Economic Policy Institute.

The numbers show the jobs picture is improving -- but too slowly and erratically, experts say.

One payroll survey showed August produced about 91,000 private-sector jobs, including 35,000 at small businesses. But the public sector, including education, shed about 35,000 jobs.

"That 35,000 new small business jobs is really on the low side and has slowed from several months ago," said Susan Woodward, a former Securities and Exchange Commission economist who analyzed Intuit Inc.'s Small Business Employment Index. "We should be in a more robust recovery right now, given past cycles."

Small businesses, with 500 or fewer workers, create half of new jobs, she said. But most of those jobs require unskilled labor.

Pennsylvania's small business employment rose 0.4 percent in August, Intuit estimated. That equates to a 5 percent increase annually, "which is pretty good," said Woodward.

Pittsburgh-area employment will increase to about 1.20 million in 2018 from an average of nearly 1.13 million for the first seven months of this year, according to state Department of Labor and Industry projections.

Here the health care sector and Marcellus shale gas industry will continue to be job generators, experts say.

UPMC said on Wednesday that it expects to hire about 1,900 people within the next year for its hospital in Monroeville, which opens next July, and its health insurance business.

Since the onset of the recession, health care jobs in Western Pennsylvania increased from 178,300 to 188,000, said economist Harold Miller, president of Future Strategies, Downtown.

Natural gas extraction is expected to produce thousands of Pennsylvania jobs, experts agree, but no one agrees on the estimates, especially for this region. A Department of Community and Economic Development study said shale gas created 23,500 Pennsylvania jobs in 2009; a Penn State University research team put the number at 44,000.

"Jobs will come from small- to midsized businesses, but they now are being held back from hiring because of a lack of consumer confidence, business confidence and concerns about the impact of regulations," said Matthew Marlin, a Duquesne University economics professor.

The hottest markets in the region for accounting and finance jobs are in education, particularly at colleges and universities, and health care, said Scott Saunders, Pittsburgh manager for Robert Half International, a staffing firm that concentrates on accounting and finance jobs.

Highly skilled information technology professionals are in demand "across the board" because companies need to boost productivity and streamline costs, said Saunders, who oversees the agency's three Pittsburgh offices.

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