Modest pace for job gains forecast

A virulent combination of cost-saving productivity gains and escalating health care costs probably will keep new hiring at a modest pace through the end of 2004 and into 2005, according to an employment outlook released by the global outplacement firm of Challenger, Gray & Christmas, Inc., Chicago.

"It remains difficult to justify new hires to those who control corporate finances. They see payroll costs surging, principally due to health benefits, while companies invest in new technology to assure that worker productivity continues to remain strong. So, why add new workers?" asks CEO John A. Challenger.

"Companies simply cannot afford to keep spending more and more for health coverage and simultaneously fund expansion. Something has to give. More firms will drop health care benefits, small business in particular."

A survey by Mercer Human Resource Consulting found that employers expect health care costs to rise by an average of 12.9% in 2005. Yet, the survey also found that companies have only budgeted for an average of 9.6%.

"This could mean employees will be asked to pick up the difference or that benefits will be reduced. It could also result in job cuts as companies try to pare costs. The biggest impact could be on small business, which employs the largest number of workers," Challenger indicates. "However, the pace of job cutting could increase [more] dramatically, as it did after Sept. 11, 2001, if there is a serious shock to the economy, such as a terrorist attack or a major disruption in the oil supply.

"The reality," cautions Challenger, "is that we will probably not see a true job market boom until the next economic cycle--around 2008." That boom likely will come either in health care, such as biotechnology or genetics, or in international business.

"Much of the job creation during this economic cycle will not take place here, but in places like China, India, and the Philippines, beneficiaries of our outsourcing and a surging global economy.

"Between technology and globalization, a large majority of white-collar jobs will become obsolete and either be eliminated or dramatically altered. In the 'New' New Economy, the biggest winners in the job market will be the 'New' Americans, highly educated, with roots in Asia, Africa, the Middle East, and Latin America, matching the diversity of the increasingly global marketplace. They will stand out and offer leadership and exceptional skills, such as the ability to speak and write a second, third, or even fourth language," Challenger predicts.

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