A Tough Year for Job Hunters

Stock investors know what it's like to see everything they own in the red, no matter the sector, industry or company. And that's what the job market will look like in 2009: pervasive losses, with precious few pockets of strength.

Nationally, we expect the unemployment rate to peak at 8% toward the end of 2009, up from a trough of 4.4% in March 2007. When the layoffs are finally behind us, anywhere from two to three million jobs will have disappeared (we've lost more than one million already). The hardest-hit areas will be those where boom-and-bust housing markets, the financial crisis and automakers' struggles have done the most damage. Unemployment could reach 10% in the Central Valley of California, Florida and Michigan, and 8.5% in New York, according to Moody's Economy.com.

By contrast, barring a collapse in commodity prices, the farm belt will hold its own. Texas will barely notice the recession, thanks to agriculture, Houston's health-care economy and an oil industry that will thrive as long as oil doesn't fall below $40 a barrel. The federal government will keep Washington, D.C.'s consultants and contractors busy. And a continuing demand for health care and education should hold unemployment in those industries to less than 5%.

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The job market overall won't be pretty, but it may not be as ugly as the direst predictions indicate. That's because pessimistic business leaders were super-conservative throughout the economic expansion. They focused on getting the most productivity possible out of their labor force -- in other words, hiring as few workers as they could get away with. Wage hikes were nominal, with merit increases in the 3% range, compared with 8% raises common in the 1990s.

A recent survey by Towers Perrin found that most employers are being just as judicious in trimming payrolls as the economy weakens. "The response is far more surgical," says Towers Perrin compensation expert Ravin Jesuthasan. Think targeted workforce reductions instead of mass layoffs, plus spending cuts in the budget for travel and entertainment.

Don't expect the ambitious job-creation plans Barack Obama outlined during the presidential campaign to offset much of the current recession's pain. Such plans take years to come to fruition -- if they do at all. Nonetheless, based on Obama's stated intentions, a number of professions could get a boost when economic growth resumes, according to outplacement firm Challenger, Gray & Christmas.

For example, a pledge to invest $150 billion in alternative energy over the next decade and to create five million "green" jobs could tap thousands of engineers, scientists, equipment manufacturers and operators in the automotive, transportation, chemical and technology industries. Education initiatives could provide opportunities for educators as well as academic counselors. Some $60 billion earmarked for infrastructure spending over ten years would demand civil engineers to plan cities and towns, and construction workers to build roads and bridges. And a push to supply broadband to every community could create thousands of telecom jobs.