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Lost Jobs: Permanent losses reach past factories to retail, building, design

WASHINGTON — Fewer construction workers will be needed.

Don't expect as many interior designers or advertising copywriters, either. Retailers will get by with leaner staffs.

The economy is strengthening, but millions of jobs lost in the recession could be gone for good.

And unlike in past recessions, jobs in the beleaguered manufacturing sector aren't the only ones likely lost forever. What sets the Great Recession apart is the variety of jobs that may not return.

That helps explain why economists think it will take at least five years for the economy to regain the 8.2 million jobs wiped out by the recession — longer than in any other recovery since World War II.

It means that even as the economy strengthens, more people could face years out of work. Already, the percentage of the labor force unemployed for six months or longer is 4.3 percent. That's the highest rate in records dating to 1948.

In Stanislaus County, unemployment continues to remain higher than the national and state rates at 18.3 percent for April. Countywide, about 43,500 people are out of work. Economists predict an even longer road back for the Central Valley, where unemployment could stay in the high teens for at least three years.

The national unemployment rate crept up in April to 9.9 percent while California held steady at 12.6 percent.

Behind the trend are the cutbacks businesses made in the recession to make up for a loss of customers. To sustain earnings, they became more productive: They found ways to produce the same level of goods or services with fewer workers. Automation, global competition and technological efficiencies helped solidify the trend.

Diminished home equity and investment accounts have made shoppers more cautious, too. Their frugality could endure well into the recovery. That's why fewer retail workers, among others, likely will be needed.

Among those whose former jobs may be gone for good are:

Mona Castaneda of Modesto, who worked in customer service for the corporate offices of Mervyn's in Hayward. Since the company folded in October 2008, the 57-year-old hasn't been able to find similar work as large corporate retailers have cut back amid shrinking consumer spending.

She worked for Mervyn's for 27 years, but the company closure, as well as those of other large California retailers including Gottschalks, created a surplus of workers — many of whom are still looking for their next job, as Castaneda is.

"Retail is just suffering," Castaneda said. "I keep in touch with other Mervyn's workers, and a lot of them are still looking, too. It's a bad time to be looking."

Julie Weber of Milwaukee, who designed office cubicles for nearly seven years. She lost her job about a year ago. Since then, she's been able to find only part-time work outside her field.

Interior design was hammered by the real estate downturn. "My hope for getting back into the industry is not very high," said Weber, 29.

Erik Proulx, 38, a former advertising copywriter in Boston, who finds more companies are turning to social media and viral marketing and are less drawn to agencies that focus on traditional TV and print ad campaigns. Proulx was laid off in October 2008, the third time an employer had cut his position or closed. He no longer wants to rejoin the industry. Proulx has started a blog to help other unemployed ad professionals network.

More than one-third of chief financial officers at 620 big companies surveyed in March by Duke University and CFO magazine said they didn't expect to restore their payrolls to pre- recession levels for at least three years. Nearly all cited higher productivity and tepid consumer spending.

"Companies have just figured out, 'We didn't want to fire people ... but now that they're gone, we've realized that we can get by without them,' " said John Graham, a Duke finance professor who directed the survey.

Productivity grew at an annual rate of 6.3 percent in the year ending in March, the Labor Department said this month. It was the largest increase in 48 years, although most economists think that pace isn't sustainable.

In the long run, more productive workers raise standards of living: Companies can pay more without inflating prices. But in the short run, high productivity delays hiring.

Three industries, in particular, where many jobs may not be coming back are retailing, manufacturing and advertising.

Retailers have lost 1.2 million, or 7.5 percent, of jobs that existed before the recession, according to Labor Department data.

Circuit City and Linens & Things have collapsed. Starbucks closed nearly 800 U.S. stores. Robert Yerex, an economist at Kronos, a work force management company, estimates that 20 percent of those jobs are never coming back.

Manufacturing has shed 2.1 million jobs, or 16 percent of its total, since the recession began. Goodyear Tire & Rubber and Boeing Co. laid off a combined 15,700 people during the recession. General Motors eliminated 65,000 through buyouts and layoffs. And as people buy fewer cars and homes, more than 1 million jobs in the auto, steel, furniture and other manufacturing industries won't return, according to estimates by Moody's Analytics.

Advertising and PR agencies have lost 65,000 jobs, or about 14 percent of the pre-recession total. Moody's Analytics estimates that those industries will lose even more within five years.

In the Central Valley, construction led the way in job losses going into the recession, and construction continues to be one of the heaviest hit industries.

"Two years from now, construction will be leading the recovery," said Jeff Michael, director of the Business Forecasting Center at Stockton's University of the Pacific. "But I don't expect it to come back strong as it was, not at all."

More than half the 15.3 million people out of work in April said they regard their layoff as permanent, the Labor Department said.

That's the highest proportion in records dating to 1967. In previous recessions, workers often endured only temporary layoffs: Their employers would recall them once business picked up.

Caterpillar Inc. has resumed hiring after laying off 19,000 full-time workers during the recession, thanks to rising demand for its construction and mining equipment. But most of the new jobs will be overseas. Of the 9,000 hires Chief Executive Officer Jim Owens said Caterpillar plans to make this year, only 3,000 will be in the United States.

Many economists say eventually, companies won't be able to squeeze any more work out of their employees. That would force employers to step up hiring.

But Janet Yellen, president of the Federal Reserve Bank of San Francisco, cautions that this won't happen soon. She believes corporate America remains in the early stages of a drive for greater efficiencies.

"We may be in store for ... high productivity growth for some time," she said in a speech this year. "If so, the rate of job creation will be frustratingly slow."

Bee staff writer Marijke Rowland can be reached at mrowland@modbee.com or 578-2284.

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