Job Cuts Continue For Ninth Month
Saturday, October 4, 2008
Employers slashed jobs at the fastest rate in five years in September, marking the ninth consecutive month of job losses and providing another grim indicator of the deteriorating state of the U.S. economy, the government reported yesterday.
Payrolls were cut by 159,000 jobs last month, a decline that did not affect the nation's overall 6.1 percent unemployment rate, but only because the job losses were offset by a reduction in the labor force. Overall, the nation's economy has lost 760,000 jobs this year, which analysts called evidence that the economy was severely weakened even before the financial crisis intensified in recent weeks.
The deepening economic downturn has hit black workers the hardest. The black unemployment rate last month spiked to 11.4 percent -- up from 10.6 percent in August -- more than double the white unemployment rate of 5.4 percent, which was unchanged between August and September.
Also, the number of people who have been jobless for 27 weeks or more rose by 157,000 to 2 million in September, a fact seen as evidence of an extremely tight job market. In all, the so-called long-term unemployed accounted for 21.1 percent of those out of work in September, the highest number since 2005.
"Behind all this financial meltdown has been an economy that has been underperforming for a while," said Jared Bernstein, a senior economist with the Economic Policy Institute. "This is the ninth consecutive month of job losses, which is precisely the picture of a recessionary job market."
The bleak portrait of the nation's job picture in the Department of Labor reports matches other grim economic news released in recent days. Taken together, they offer a broad picture of an economy in decline: consumer spending has flat-lined, factory orders have declined, auto sales have trailed off dramatically, housing starts continue to spiral downward and manufacturing activity has contracted.
"Our economy is experiencing major shocks, particularly in the housing and credit sectors, which impact every American," said Commerce Secretary Carlos M. Gutierrez. "We know it will take some time to work through this difficult period."
Many economists have said enactment of a $700 billion bailout for the nation's ailing financial system is expected to limit the decline in the economy but not reverse it. Consequently, many analysts are saying that overall economic growth has ground to a halt and that the economy would likely tip into outright decline at the end of the year and in the first half of 2009.
Meanwhile, wage growth for workers is slowing. Average hourly earnings rose to $18.17 in September, a 0.2 percent increase from the previous month. A small decline in hours worked has resulted in a reduced average weekly earnings over the past month to $610.51, or 81 cents less than in August.
"Right now the job market is not creating any new buying power for people, and credit is less available, so it is hard to see where the economy gets much of a boost," Bernstein said.
After passing the financial bailout package, the House voted to extend unemployment benefits for workers who have exhausted their benefits. The bill would extend the 26 weeks of regular benefits by 7 weeks for some workers and 13 weeks for those residing in states where the unemployment rate is above 6 percent. But the measure is considered unlikely to pass this year, as efforts to move it to the Senate floor earlier this week were unsuccessful.
The Labor Department said that job losses occurred across a wide range of industries and economic sectors. Factory jobs were down by 51,000 last month -- the 27th straight month of manufacturing job losses despite a strong export market -- led by declines in jobs with automobile and auto parts makers, a sector that shed 18,000 jobs last month.
Construction also continued its steep decline, shedding 35,000 jobs in the past month, while the number of retail jobs dropped by 40,000 in September, bringing the losses in that sector to 70,000 over the past year.
The nation's beleaguered financial sector also experienced sharp job losses last month, as 17,000 jobs were cut, nearly half of them in securities and investment firms. Overall, the financial industry has lost 172,000 jobs since its employment peak in December 2006.
Job growth continued in the health-care industry, which added 17,000 jobs in September, bringing growth there to 269,000 jobs over the past year. Government employment also ticked upward, as did mining, which added 8,000 jobs, bringing expansion in that sector to 241,000 since reaching a low in April 2003.
"We're on a rocky road," said Roy Krause, chief executive of staffing and recruiting company Spherion, a Ft. Lauderdale firm that places more than 300,000 people a year in jobs across North America. "There is so much uncertainty. It makes our employer clients reluctant to launch off into any initiative. We hope that some of that would be addressed by the bailout package."