Weak Data Signal Grim Prospects For Workers
Unemployment Rate Highest in 26 Years

By Peter Whoriskey
Washington Post Staff Writer
Saturday, October 3, 2009

The recession's toll on workers rose again in September, with the unemployment rate climbing to 9.8 percent, its highest level since 1983, as the count of the nation's jobless topped 15.1 million, according to a government report released Friday.

The report underscores fears that, even as some sectors of the economy have stabilized and stock markets have rallied, the prospects for workers remain bleak.

Economists have forecast that unemployment will rise through the end of the year, when layoffs tend to increase anyway, and some say that the surge of unemployment will extend well into 2010.

The job losses have continued for 21 months, the longest such stretch in 70 years of records, analysts say. Friday's report underscores persistent long-term joblessness, with more than one-third of the nation's unemployed out of work for more than six months.

"It's safe to assume that the recession is technically over, but when is it going to feel like it's over in the real economy?" said Heidi Shierholz, an economist at the Economic Policy Institute. "That's the question of the hour, and in no uncertain terms, this report shows we are a long way away from that."

In places like Macomb County, Mich., a suburb of Detroit, the unease among the long-term unemployed is palpable. The five employment offices in the area recently hired security officers to stand in the lobby.

"It's something we've never done before," said John Bierbusse, head of the workforce investment board in Macomb County, which seeks to retrain and assist people in finding jobs. "People are desperate. They're on edge when they come into our offices."

Continued weakness in the labor market could make it harder for a full recovery to take hold.

One of the more immediate concerns, particularly in states with high unemployment such as Michigan and Nevada, is how long the federal government will continue to extend unemployment benefits. The House has passed legislation to give an additional 13 weeks of benefits to residents of states with unemployment above 8.5 percent, but a similar measure awaits action in the Senate.

As it is, a few hundred people in Macomb County run out of their benefits every month, but if the program is not extended again soon, a few thousand will start losing their benefits monthly, Bierbusse said.

"It's not like there's a ton of jobs out there," he said.

There are now six unemployed people for every job opening across the United States, and the odds against job seekers are clearly taking a psychological toll.

The category of people the federal government classifies as "discouraged workers" -- that is, people not seeking work because they believe there are no jobs available -- has risen by 239,000 in the past year to 706,000.

A survey released this week by the Business Roundtable, an association of chief executives whose companies together employ 10 million people, said only 13 percent of its members intended to increase hiring in the next six months. Forty percent said they expected their U.S. payrolls to decline during that period.

In another sign that jobs will remain scarce, the Commerce Department reported Friday that factory orders fell by 0.8 percent in August; economists surveyed by Bloomberg News had expected orders to remain flat.

Exactly when hiring will rebound is a matter that divides economic forecasters.

Ed Yardeni, president and chief investment strategist at Yardeni Research, is relatively optimistic. He said the recession likely ended in June, and that "we are getting pretty close to the peak of unemployment."

Even so, Friday' jobs numbers were grim, and worse than many had expected.

"The decline in initial [jobless] claims shows that at least the firings are down," Yardeni said. "What we're not seeing is the hiring."

Total nonfarm payroll employment declined by 263,000 in September, according to the report from the Bureau of Labor Statistics. Construction employment dropped by 64,000, manufacturing by 51,000 and government employment by 53,000, much of it in local government.

Health care, by contrast, continued to create jobs. Employment in health care rose by 19,000, with most of the gain occurring in ambulatory health-care services. Health care has added 559,000 jobs since the beginning of the recession, the report said.

The jobs picture in the Washington region has been mixed. Unemployment in the District has been above national levels, reaching 11.1 percent in August. Maryland and Virginia have escaped the worst of the trend, however: Maryland's unemployment was 7.2 percent and Virginia's was 6.5 percent.

Consumer bankruptcies in the United States rose 41 percent last month from September 2008, the American Bankruptcy Institute said Friday. People filed 124,790 cases last month, compared with 88,663 a year ago.

Through September, 1.04 million cases were filed, officials said.

"Bankruptcy filings continue to climb as consumers look to shelter themselves from the effects of rising unemployment rates and housing debt," Samuel J. Gerdano, the institute's executive director, said in a statement. "The consumer filing total through the first nine months is consistent with our expectation that consumer bankruptcies will top 1.4 million in 2009."

But as telling of economic distress as the 9.8 percent figure is, it may be masking even greater weakness in the labor market, analysts said.

About 571,000 people left the labor force, either because they were discouraged or for other reasons. If they had remained as part of the labor force, the unemployment rate would have jumped even more.

"We are going to see deepening pain in the real economy for a very long time," Shierholz said. "This recession is just astounding for the duration of the unemployment."

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