Amidst Turmoil, Glimmers of Hope

 Sure the hemorrhaging continues, but the rate of the bloodletting seems to be slowing. The legal sector and new graduates can expect to take it on the chin.
 
By Michael Beygelman
 
 
One positive observation about the economic and employment situation in the U.S. is that we’ve had few surprises in the reported data. However, this doesn’t mean that the reported data is encouraging. On the contrary, the data have been somewhat shocking, and the rate at which the U.S. employment situation is deteriorating is still significant.
 
For example, non-farm payroll employment continued to decline sharply in March (663,000), during which time the unemployment rate rose from 8.1 to 8.5 percent. Since the recession began in December 2007, the U.S. has shed 5.1 million jobs, but what’s significant is that almost two-thirds occurred within the past five months. There is also an impact on overall workforce morale—productivity in Q4 2008 declined 0.4 percent. Some noteworthy developments in the global economy follows.
 
Confidence Climbing. The Conference Board Consumer Confidence Index, which had declined sharply in February, was flat in March. The index now stands at 26, up from 25.3 in February. Despite this, those claiming business conditions are “bad” rose to 51.1 percent from 50.5 percent, while those claiming business conditions are “good” edged down to 6.8 percent from 7 percent last month. The slight rise in consumer confidence could be an initial sign that the bottom of the economic downturn is near.
 
Impact of the G20. The Group of 20 (G20) Summit concluded on April 2, with a mutual commitment from the participating countries to provide $1.1 trillion in funding to increase capital for the International Monetary Fund. The summit, which took place in London, included leaders from 19 countries and the European Union to collaborate on solutions for recovery from the global recession. The goal of this funding, announced at the summit’s conclusion, is to preempt a contraction in global trade, which is expected to go down for the first time in 30 years. At news of the announcement, stock markets around the world rose.
 
Colleges and Employers. Companies plan to hire 22 percent fewer colleges graduates this spring compared with previous years. Many of the industries that previously scooped up talented college grads are adapting to the recession, which often includes limiting entry-level hires for the time being. Opportunities still remain for these graduates; however the number of positions and locations has changed.
 
Spotlight on the Legal Profession. The number of unemployed lawyers rose by 66 percent last year to a 10-year high of 20,000, as reported by the U.S. Department of Labor. According to a web site called Lawshucks.com, it has been a month-over-month increase of 1,540 layoffs in January, 2,708 layoffs in February, and 3,677 in March. And some days are more dangerous than others: 36 percent of all lawyers get laid off on Thursdays.
 
Law firms are also delaying hiring final-year law students, and graduates with committed jobs this spring are being offered money to delay their start dates. Some are even being told there will be no work for them until later in the year or maybe until 2010. CNBC featured a segment on the employment situation in the legal profession recently, which I found interesting yet counterintuitive. Given all the recent economic turmoil, bankruptcies, TARP money, etc., one would think that the legal profession would be thriving.
 
Looking beyond the numbers and at the sentiment on the street, people feel like there are some glimmers of hope. Most believe or want to believe that we’re going to get fewer negative numbers as we go through the summer. It looks like employment demand is leveling in areas such as finance, engineering, and information technology. President Obama is very active in the U.S. automotive industry, and the Dow and the S&P indices registered significant gains in the month of April, so when workers get their April 401(k) statements, they will also “feel” wealthier. Hopefully the combination of all these things will continue to ease the concerns of consumers during the forthcoming months and begin to establish a bottom to the precipitous decline of our labor situation.
 
 
Michael Beygelman is SVP, business development with Adecco Group North America. He can be reached at michael.beygelman@adeccona.com.