When economy turns, some jobs won't return

Despite signs of a recovery, the economic recession is expected to leave some permanent scars on Charleston's job market.

Economic analysts are focusing on when employers will begin hiring again and which sectors will recover first. But it's tougher to figure out how many jobs won't come back at all.

As manufacturers, hotel chains and even grocery stores became more efficient during the recession, they'll likely need to hire fewer workers once consumer spending picks up, experts say.

Some jobs are being replaced with better technology or computer programs, while other employers may keep a heavy workload distributed among their remaining staff.

Capitalism depends on progress, said Doug Woodward, an economist at the University of South Carolina's Moore School of Business. But during times of economic hardship, industry advancements tend to pick up the pace, which makes the hiring prospects even more bleak for the hundreds of thousands of South Carolina residents who are looking for work.

"Nobody has the answer to this," Woodward said.

The same drive for efficiency, for example, has put a squeeze on the number of administrative and support positions over the decades. But the severity and expanse of this recession means the "more with less" mantra to spread to other industries, said economist Don Schunk of Coastal Carolina University.

"This recession -- different from any other recession -- has shown retailers and the service industry how to take advantage of productivity gains," Schunk said. "If they really sit down and look at their business model, they're realizing they don't need that many workers ... and that's going to be a real problem as we try to find some job growth in coming years."

Auto pilot

A highly visible example of employee-replacing technology is the self-service kiosk stations that have popped up at grocery stores, movie theaters and post offices. The kiosks could help a business cut costs, but they stand to aggravate the jobs recovery.

"If places like these can't generate jobs, where is it going to be?" Woodward asked.

The tourism business, one of Charleston's dominant economic sectors, also stands to lose permanent positions to the trend as hoteliers, airlines and car rental businesses add self-check-in kiosks, Woodward said. That would mark a shift for the industry, which has been labor-intensive because of its emphasis on service.

"If people were frustrated because of long lines, they'd hire more workers," he said. "I don't notice that anymore."

There are no widely circulated numbers to quantify how many labor hours an employer can cut using a self-service kiosk.

Francie Mendelsohn, a Maryland-based consultant who specializes in the kiosk industry, said that even in anonymous surveys, employers are hesitant to say they bought the automated machines to cut back on their staffing costs. Instead, they'll say they were trying to improve customer service or allow them to reallocate their workers elsewhere.

"They are reluctant to admit it's to reduce head count, but you know and I know it's to get rid of employees," Mendelsohn said.

Employees know it, too, she added.

Mendelsohn gave an example of a grocery store chain that bought automated machines that customers could use to order deli products. Months after the machines were installed, they were mysteriously underutilized. It turned out that worried employees were putting "out of order" signs on the devices in an effort to preserve their jobs, she said.

Hands on

Automation also is to blame for a portion of the Charleston manufacturing industry's 1,600-job loss during the first 24 months of the recession. While outsourcing has caused some of the state's manufacturing decline over the years, local companies are perpetually finding ways to refine and improve productivity, said Jennifer DeWitt of the Lowcountry Manufacturers Alliance.

"The idea of an efficiency and process improvements -- that's what every manufacturer has been looking at," she said.

That drive for higher efficiencies has cut into an employer's work force needs.

Take, for example, DuPont's under-construction Kevlar plant in Goose Creek.

The $500 million project was hailed as a major investment from a Fortune 500 company and proof that South Carolina can maintain its manufacturing heritage. But the plant will need only about 100 workers once it's fully operational.

One of few industries that seems to be immune from the technology-displacing-labor trend is the real estate business, said USC's Woodward, pointing to the size and scope of the product it sells. Still, many economists predict the country's housing glut will make the real estate industry among the last to recover.

And once it does, employment is expected to level out at a mere shadow what it had been while the market was climbing toward its peak.

The home-building business beefed up its ranks rapidly before sales began to skid.

"When the volume picked up and so many homes were purchased ... builders wanted to make sure they were maintaining a level of service," said Philip Ford, executive vice president of the Charleston Trident Home Builders Association.

The trend now is to spread more responsibilities among fewer workers, the way it used to be.

"Before the boom, your warranty person was also maybe your customer service person," Ford said.

Real estate agents also will likely return to the industry in smaller numbers, as will mortgage specialists brokers. Prospects also have dimmed for the finance and banking sector, where employment swelled to an unsustainable level before the recession kicked in, according to Thomas Philippon, an economist at New York University. He estimated that the finance industry expanded 20 percent beyond what would be needed under less-robust market conditions.

As a result, he predicts the industry will continue to shed jobs, both on Wall Street and at the local level, affecting "everybody from loan officers to asset managers."

"When you don't have a credit bubble, you don't need all these people," Philippon said.

Score card

The Charleston area's economy recorded steep job losses during the first two years of the recession, which officially began in December 2007. But not all sectors lost jobs.

Losers

Manufacturing: -1,600.

Retail: -4,600.

Tourism: -3,900.

Gainers

Government: +2,300.

Education, health services: +2,500.

Professional, business services: +2,700.

Source: S.C. Employment Security Commission

Reach Katy Stech at 937-5549 or kstech@postandcourier.com.