U.S. Workforce Shrinks For 6th Straight Month
Friday, July 4, 2008
Employers cut 62,000 jobs in June, marking the sixth consecutive month that the nation has shed jobs, according to a government report released yesterday, deepening concern that the struggling U.S. economy could turn worse before it gets better.
The collapse in the real estate and mortgage industries, coupled with the specter of inflation fueled by the rising price of oil and other commodities, has crimped employers and left top policymakers and private analysts convinced that the economy is in for a prolonged period of sluggishness.
"We're not in a traditional recession dynamic where jobs get cut aggressively," said Bruce Kasman, chief economist for J.P. Morgan Chase. Still, he said, "things may be starting to get worse, not better."
Of immediate concern to many economists is how the nation will emerge from the economic slowdown even as it faces inflationary pressures brought on by record-high oil and commodity prices. The price of a barrel of oil pushed near $146 before falling back yesterday, and it has increased about 50 percent since the start of the year.
Wrapping up a European tour, Treasury Secretary Henry M. Paulson Jr. said high oil prices "are a strong headwind, and at this level, they have got a high risk that they are going to prolong the slowdown."
"I don't believe this situation avails itself of quick fixes," Paulson said from London in comments reported by the Associated Press. He noted that, with the global appetite for oil steadily rising and production and refining capacity increasing less quickly, "there are questions in the short term about the ability to meet the demand."
The Department of Labor reported that the economy has lost about 438,000 jobs since the beginning of the year -- a figure that includes revisions for April and May to reflect an additional 52,000 jobs lost in those months. The unemployment rate, which is affected by the number of people seeking work and other factors, was at 5.5 percent, unchanged from a month earlier.
The job losses were led by cuts in construction, financial services and manufacturing. Temporary and other employment agencies also experienced steep job cuts, which some economists saw as further evidence that the bleak employment picture will not improve anytime soon. There were also some cuts in retailing, which combined with the other reductions overwhelmed modest employment increases in leisure and hospitality, health care, mining, and government.
In a separate report, the Labor Department said the number of people applying for unemployment insurance jumped by 16,000, to 404,000, the highest level since late March.
There were 8.5 million unemployed people as of June, up from 7 million a year earlier.
"The economy has entered a slow-motion recession," said Dean Baker, co-director of the Center for Economic and Policy Research. "It is not seeing the dramatic plunges in jobs that characterized prior recessions, but the collapse of the housing bubble is slowly sinking more and more sectors of the economy."
The report said that average hourly wages crept up 0.3 percent from a month earlier, to $18.01, but that tiny bounty has been more than offset by higher food and energy prices. The report also said that 5.4 million Americans -- about 3 percent of the labor force -- were working part time either because their hours had been cut or because they could not find full-time employment, a figure unchanged from May but up 1.1 million from a year earlier.