You're Fired. Please Keep Working

That aging human workforce still has some scarcity value, robots or not. JL

Eric Morath reports in the Wall Street Journal:

Americans are less likely to be laid off than at any point in at least 50 years. Factors include elevated levels of long-term unemployment, an aging workforce, a decline in manufacturing work and more risk-averse businesses, which also point to a less dynamic economy. After seven years of consistent job growth, firms are reluctant to let employees go in a tight labor market in which available workers with a recent employment history are quickly snapped up.
The Labor Department reported Friday another solid month of U.S. hiring in July. Getting less attention these days, but no less important, is how little American firms are firing.
Americans are less likely to be laid off than at any point in at least 50 years. For every 10,000 people in the workforce, 66 claimed new unemployment benefits in July, trending at the lowest point on record going back to 1967. The previous low point, 83 per 10,000, was touched in April 2000, at the height of a tech boom. Separate Labor Department data shows the rate of layoffs and other discharges as a share of total employment this year is at the lowest level on records back to 2000.
The steep fall in layoffs is mainly a result of a vastly improved labor market. It means Americans have more job security than they may realize less than a decade after dismissals spiked in the 2007-2009 recession. But other factors with more mixed implications are at play, including elevated levels of long-term unemployment, an aging workforce, a decline in manufacturing work and more risk-averse businesses, which also point to a less dynamic economy.
After nearly seven years of consistent job growth, firms are reluctant to let employees go in a tight labor market in which available workers with a recent employment history are quickly snapped up.
“It’s tough to find qualified candidates—you kiss several frogs to find a prince,” said David Daoust, chief executive of Minnesota marketing firm Brand Advantage Group.
His firm recently merged with a crosstown competitor. Rather than dismiss duplicative staff, he retained all 26 new employees. Some workers were retrained for new roles, and the company extended its remote-work policy to ease the burden for employees finding themselves with longer commutes.
“We couldn’t afford to let those workers get away and maintain the same level of service,” he said.
Demographic trends are influencing employment decisions, said Bill Ziebell, head of  Arthur J. Gallagher & Co.’s employee benefits and compensation consulting practice. In the late 1990s baby boomers were in their prime working years, now they’re retiring in greater numbers.
“If you have big segment of the workforce winding down due to retirement, why would you let anyone go?” he said.
Another factor is manufacturing’s diminished role in the economy. Factories regularly lay off and rehire workers to adjust production levels. But a much smaller slice of Americans work in manufacturing today than in decades past.
The current jobless rate is relatively elevated in relation to layoffs. For example, when the unemployment rate dipped to 3.4% in October 1968, about 102 per every 10,000 workers filed for unemployment benefits, well above July’s rate of layoffs. That suggests less churn in the labor market, meaning a lack of economic dynamism.
Businesses appear to be taking less risk in this expansion. During the latest expansion, new businesses have accounted for a little more than 11% of all new private-sector jobs created in the U.S., according to Labor Department. During the 1990s, the figure was 15%. New businesses fail at greater rates than established firms, so fewer new companies could equate to fewer layoffs.
Federal Reserve researchers found in a paper this year that declining business dynamism weighs on productivity because labor and investment aren’t moving toward their most productive uses. Soft productivity gains is a factor many economists see holding back wage growth and overall output.
There’s another reason that unemployment is high relative to layoffs: Many unemployed Americans have been out of work for months and are sitting in the economy’s sidelines. The number of Americans unemployed for 27 weeks or more was about 35% more last month than when the recession began in late 2007. By contrast, the share of the labor force unemployed for 5 weeks or less is the lowest on record back to the 1940s. That means fewer people in the market ready to hop to a new job, and more hoarding by firms of what they’ve got.
Separations have shifted toward workers quitting their jobs from being dismissed, said Jed Kolko, economist with job search site Indeed. The helps explain the low level of jobless claims. The unemployed typically apply for jobless benefits when they are involuntarily let go. Those who quit or are fired for cause generally can’t apply. This, too, has narrowed the pool of available workers and gives firms an incentive to hold on to existing staff.
Patrick Graham, chief executive of Charlotte Works, said his agency’s work is focused on those who he calls the “chronically unemployed” and those in low-wage, part-time work.
It’s created a paradox in Charlotte, N.C.: a persistent level of long-term joblessness and underemployed, and businesses scrambling to find workers in a region with a 3.6% unemployment rate.
“It’s a tale of two cities,” Mr. Graham said. “You have people who can’t find the level of employment they need to make a decent living, and yet there’s a skills gap for midlevel jobs which causes employers to recruit talent from outside the area.”