AP Economics Writer
---- — WASHINGTON (AP) — Companies have all but stopped laying off workers. They just aren’t hiring many.
When the government issues the July employment report Friday, it will likely show another solid month of job growth. But the job gain can be misleading because it’s a net figure: The number of people hired minus the number who lose or quit jobs.
When employers are cutting few workers, as they are now, it doesn’t take many hires to create a high net gain.
Last week, the number of Americans applying for unemployment benefits fell 19,000 to 326,000, the Labor Department said Thursday. That was the fewest since January 2008.
Those applications reflect layoffs. And layoffs have averaged 1.65 million a month this year through May, even fewer than the 1.77 million average in the pre-recession year of 2006.
So few people are losing their jobs that it’s easy to forget that the job market isn’t yet healthy. The unemployment rate remains a still-high 7.6 percent — far more than the 5 percent to 6 percent associated with a normal economy.
According to a survey of economists by FactSet, the economy likely added 183,000 jobs in July. Yet the picture isn’t as bright as that net gain might suggest. Consider why a net gain can be deceiving:
Suppose a company cut 40 workers and hired 50. Net gain: 10 jobs. But say it instead cut only 10 and added 30. It would have hired fewer workers. Yet it would have created twice the net job gain — 20.