Job market could remain bleak for years

Economic recovery may not be strong enough to absorb millions left jobless

As the deep economic downturn continues to swell the pool of unemployed workers, it is also delaying the recovery that will be needed to get those people back to work.

Even if Congress and the White House can agree on a huge program of fresh spending and tax cuts to get the economy going again, it could take years to create enough new jobs to hire the idle workers back and keep up with the ongoing growth in the labor force, economists say.

The U.S. economy has been shedding about a million jobs every two months, and there are few signs that pace will ease up in the near future. New figures will be published Friday morning and they are expected to show the economy lost another 500,000 jobs in January, economists say.

There are some indications that layoffs may even be picking up speed. The number of workers filing their first claim for jobless benefits last week was much higher than expectation — up by 35,000 to 626,000, the highest level in 26 years.

Big companies announced over 240,000 layoffs last month, a seven-year high, according to Challenger, Gray and Christmas, an outplacement firm. As job cuts deepen, they’re also widening to industries that had been holding up relatively well.

"We're certainly seeing layoffs coming from all corners of the economy," said John Challenger, the firm's CEO. "That's one of the things that is really unique about what's happening right now. It's not just automotive and banking and housing. We're seeing it in pharmaceuticals and telecom and heavy equipment."

For much of the past two decades, the bulk of job creation came from small businesses, which account for more than half of all private sector jobs. While large-scale layoffs at big companies are getting the biggest headlines, weakness in the job market is now spreading to smaller companies, according to Joel Prakken, chairman of Macroeconomic Advisers, which manages a monthly employment survey conducted by payroll processor ADP.

"Early in this episode, the job loss seemed concentrated in the larger firms," said Prakken. "But in the last several months, they've spread quite aggressively to medium- and small-sized outfits. That leaves no doubt the recession has been spread beyond the epicenter of housing and mortgage-related finance out into the mainstream economy."

Source: msnbc.com , By John W. Schoen