Jobless Rate Jumps To 7.2%
Saturday, January 10, 2009
Unemployment soared last month to 7.2 percent, but even that gloomy figure may mask the degree to which the job market is in a tailspin.
The fine print of yesterday's report from the Labor Department showed that a broader measure of joblessness -- which includes people who are working part-time but would prefer a full-time job and people who want work but have given up looking -- rose by nearly a full percentage point, to 13.5 percent.
The overall unemployment rate jumped from 6.8 percent in November, the Labor Department said. Employers cut 524,000 jobs last month, 2.6 million over the course of 2008. Companies not only slashed workers, but also cut back on hours for their remaining employees, to the shortest average workweek on record.
"The numbers are pretty rotten," said David Wyss, chief economist at Standard & Poor's, "and as you look at the details of this, it's hard to find any bright spots."
The weak results were roughly in line with expectations, one reason that the stock market was down only modestly on the news. The Dow Jones industrial average fell 1.6 percent, or 143 points. Some analysts said they have become almost numb to horrible economic news.
"When you have an economy in free-fall, you have to expect job losses of this magnitude," said Richard Yamarone, chief economist at Argus Research.
Job losses have become perhaps the most visible sign of the current stress on the economy, partly because jobs have disappeared at an accelerating pace in recent months. As President-elect Barack Obama urges approval of a massive program of tax cuts and government spending, he has pointed to the growing ranks of unemployed as one of the most pressing reasons to act quickly, arguing that his plan will save or create 3 million jobs.
"Today's job report only underscores the need for us to move with a sense of urgency and common purpose," Obama said yesterday. "There is a devastating economic crisis that will become more and more difficult to contain with time."
All signs are that the labor market will continue weakening in 2009. Boeing, for example, said yesterday that it would cut 4,500 jobs from its commercial-airplanes division this year. A separate report yesterday showed that businesses' inventories are still rising, suggesting that they still need to cut back further on their operations. Many economists think the jobless rate could top 9 percent, or even hit double digits, by the end of the year.
More so than in past recessions, employers are finding ways to tighten their payrolls beyond laying off staff. They have long been on a "hiring strike," leaving empty jobs vacant. Now they are also cutting hours. Combined with hourly wages that have been essentially flat, that helps explain why consumer spending has fallen sharply and retailers are ailing.
"Even though a part-time job counts the same as a full-time job in the headline numbers, to a person who is working part time because that's all they can get, it's not the same quality of employment," said Michael J. Feroli, an economist at J.P. Morgan Chase. "We still have significant adjustment to go, and conditions probably aren't going to get noticeably better in the next few months."
Job losses are rising rapidly even among groups that normally are insulated from recessions. Among people with a college degree, the unemployment rate spiked to 3.7 percent from 3.2 percent.
In a sign of the breadth of the strain on the economy, joblessness rose sharply among workers of every race and gender. Unemployment among whites rose to 6.6 percent from 6.2 percent. Among blacks, it rose to 11.9 percent from 11.3 percent. Latino unemployment rose to 9.2 percent from 8.6 percent. Unemployment among men shot up to 7.9 percent from 7.4 percent, and among women to 5.9 percent to 5.6 percent.
Almost all sectors cut back on jobs. The steepest losses were in manufacturing, construction, temp services and retail. Health care and government were the only major sectors that created jobs.
Some of those losses in retail and temp services may come back in the coming months. The Labor Department adjusts the data to try to smooth out ordinary seasonal variations. Because retailers did not hire many seasonal workers or temps this year, they are likely to cut fewer jobs in January and February. That should provide some support to job growth in the immediate future, economists said.