Atlanta No. 4 in Job Losses

January 3, 2003

By MICHAEL E. KANELL, The Atlanta Journal-Constitution

New government figures peg metro Atlanta's recent job losses as the nation's fourth-worst -- an improvement from the city's ranking a year ago, when it was second-worst.

The fastest-growing large city for a decade, Atlanta hit the wall in 2001, bleeding jobs from three sectors that had paced its rapid growth: transportation, tourism and telecommunications.

More than 85,000 jobs have been lost since the crest of that boom, with the first wave coming in cuts from airlines, hotels and technology companies.

And the bad news has lingered. About 30,000 jobs disappeared in the 12 months up to November, the Bureau of Labor Statistics said Friday. Many were second-round cuts in core industries. But the worst recent damage was done in construction and retail, echoes of pain in the growth sectors.

"What you are seeing is the ripple effect," said Rajeev Dhawan, director of the forecasting center at Georgia State University. "And it's going to be a while before we see the end of this problem."

The only metro areas hit worse than Atlanta were Chicago, which lost 55,700 jobs; New York, down 42,500; and the Seattle area, shrinking by 30,500 jobs. A year ago, only New York -- which had lost 82,500 jobs -- had worse job losses than the 48,300 sliced from Atlanta payrolls.

The region's rebound is largely dependent on factors far beyond Georgia's borders. And while optimists see a slow but steady improvement in the national economy, the recovery is fragile.

With war worries and credit card debt dogging many households, consumer spending is not expected to grow rapidly. With profits still anemic and the future uncertain, companies, too, are reluctant to commit.

But assuming the nation's problems with Iraq and North Korea are resolved quickly, Atlanta should add 25,000 jobs by the end of this year, Dhawan said. That still would be less than half the jobs added during each of the boom years in the late 1990s. Still, the economic engine should be accelerating by year's end, he said.

"Don't pop the champagne yet; not until 2004 -- if all things go fine."

There is a lot that might not go well. For instance, consumers, who represent more than two-thirds of the economy, could be shaken by a decaying job market. They might spend even less. More layoffs also might undercut the housing market, which has been crucial to the economy.

That particular threat has a trial run this month, since post-holiday layoffs typically throw thousands out of work.

An average of more than 50,000 jobs across the state are axed every January. Last year, 55,800 positions were slashed, more than half from retail, said Michael Wald, regional economist for the Bureau of Labor Statistics.

"January is always a bad month," Wald said. "But since we didn't hire as many people in 2002, does that mean that in January there won't be as many laid off? We don't know that."

Troubled sector

Two years of cost-cutting has already taken a toll on wholesale and retail trade. The sector has been shaved back to the level of 1998: about 381,500 jobs. That trimming reflects the increasingly cautious consumer along with thinning profit margins.

And even when retail is at its most lucrative -- during the run-up to the holidays -- hiring has become increasingly anemic.

As the holiday buying season cranked into gear in November, a mere 4,600 retail jobs were added -- exactly half the number added a year earlier.

Back in 1996 -- before the opening of several massive malls and when Atlanta was several hundred thousand people smaller -- retail payrolls swelled by nearly 11,000 jobs as the holiday season cranked up. This year, many retailers went into the holidays with hiring held to a minimum, figuring on sluggish sales and hoping to keep costs low, Wald said.

"Despite their expectation for a mediocre Christmas, it was worse than they expected," he said. "They still got whacked."

The news, however, has not been uniformly bad.

Without job growth in sectors like services, the picture would be far worse. Wholesale and retail trade dropped 28,700 jobs. Construction lost 15,600 jobs.

But in 2001, construction had peaked with 125,000 jobs as both housing and office-building boomed. Roughly 6,000 jobs were slashed in the month after the Sept. 11 terror attacks, and the sector's slide has yet to stop.

"Generally, jobs drop in the winter and pick up again toward summer, but this time you didn't get that," Wald said.

By November, construction was down to 103,400 jobs, Wald said. "I wouldn't say it has bottomed out yet. We will see."

Favored for relocations

Metro Atlanta added more than 680,000 jobs during the decade before the bubble burst in 2001. And despite the pounding it has taken in the past two years, Atlanta is still ahead of the pack, argued Hans Gant, senior vice president at the Metro Atlanta Chamber of Commerce.

"The people who make site-selection decisions still rank Atlanta as one of the best places to relocate or expand," he said. "We had 28 or 29 companies relocate to metro Atlanta [last year]. I think we are beginning to see the turnaround, and we are encouraged by what we have seen since last summer."

Of course, that depends on many factors beyond local control. For example, the recession has meant declining revenues for local and state governments, most of which are legally forbidden from running deficits like the federal government does.

State and local agencies without enough money must either cut programs and people or raise taxes. Both hurt the region's economy -- which in turn could mean less tax revenues. Government accounts for 281,700 jobs in metro Atlanta, more than 10 percent of jobs locally.

During the past year, Georgia's local and state governments added 4,800 jobs, Wald said. But many now face revenue shortfalls.

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