Employers hopeful, but not yet hiring

Though signs suggest an economic recovery, 'we're not there yet'

By Kirsten Valle - The Charlotte Observer

After the economic downturn forced Sealing Agents Waterproofing to shed more than a third of its 170 workers, President Trent Hattaway is finally seeing sales creep up again.

But he's holding off on hiring at the Indian Trail business, which seals basements and crawl spaces in high-end homes. He's looking for evidence of a lasting turnaround - such as more building permits and a more consistent stock market - before adding workers again. And he's still pained by the recent layoffs.

"Anytime you lay people off, you get very gun-shy about hiring," he said, "because these people were friends."

The reluctance of employers such as Hattaway to hire new workers - despite encouraging economic signs - helps explain one of the major paradoxes of the current economy: Experts say the recession has ended, the housing market is showing signs of life and the stock market is above 10,000 for the first time in a year. But until companies start hiring again, it won't feel like much of a recovery.

Local jobless numbers released Friday show hiring in the Charlotte area remained essentially flat in September, with employers adding 340 jobs in a region that employs more than 750,000. The region's unemployment rate fell to 11.6percent, down 0.2 points from a month earlier.

Economists and employers predict that it will take at least a few more months before hiring becomes more robust.

Things are getting better, and the region has cleared one major hurdle, as layoffs have slowed. Still, it's expensive to hire full-time workers and emotionally taxing to consider the consequences if the economy dips again. Employees who have kept their jobs are working harder than ever, and many companies have learned to make do with a leaner staff.

Employers say they're waiting until they see bigger and steadier improvements in their businesses. That means a consistent improvement in sales, a drop in excess inventory and more consumer spending. It's a tricky cycle, though, because consumers aren't likely to spend if they're out of work.

"It's one thing for economists to say the worst is behind us, but for small businesses, they don't care about that," Coastal Carolina University economist Don Schunk said. "What we need to keep an eye on is the spending habits of the employed. That will be at the leading edge ... of that positive ripple effect."

When hiring begins, likely next year, small businesses are expected to drive the growth. Manufacturers could lead the charge, too, because they saw the greatest pullback during the recession.

Economists say it could take until 2011 or later for the overall economy to create jobs at the breathless pace of better years.

Economy shows signs of life

The Charlotte region prospered for decades as its manufacturing sector thrived and, more recently, its banks bloomed into national powerhouses. Office towers rose uptown, and people moved from all over the country in search of jobs.

In 2005, the region added almost 28,000 jobs; the next year, almost 38,000. The number of people employed in the area climbed to more than 800,000 in 2006, and the unemployment rate hovered around a modest 4.4percent.

For a while, the region seemed immune to the deepening downturn, even as the manufacturing sector shriveled. Employment peaked at more than 813,000 in April 2008. But a few months later, the financial crisis hit, sending banks spiraling. The Charlotte area's unemployment rate shot into double digits, and the number of workers fell drastically as sweeping layoffs rocked the financial services sector. In 2008, the region lost almost 25,000 jobs, and the area has lost almost 30,000 so far this year.

Since this summer, the economy has shown signs of life. The housing market, for instance, has picked up, sparked in part by the government's first-time homebuyers tax credit. Some companies have announced plans to hire, such as health care consulting firm Premier, which said it would move its headquarters to Charlotte and hire 300 workers over the next five years. Month-to-month employment numbers have ticked up slightly.