By Neil Irwin and Michael A. Fletcher
Washington Post Staff Writer
Saturday, November 7, 2009
The jump in the unemployment rate to 10.2 percent, reported Friday, suggests that the job market could take longer than expected to recover and deepens the pressure on President Obama to come up with more immediate solutions.
The jobless rate crossed into double digits last month, from 9.8 percent in September, the Labor Department reported. That is the highest level since 1983 and evidence that the economy, though expanding, has not yet grown enough to end the brutal conditions facing American workers.
A broader measure of joblessness that includes people working part time for lack of full-time positions and those who have given up looking for work out of frustration rose to 17.5 percent from 17 percent.
Economists have been projecting that job growth would resume early in 2010 and that the unemployment rate would begin to drop by the middle of the year. But that forecast is in doubt because job losses in the past few months are decelerating very slowly. Typically after a recession, the jobless rate keeps increasing for a few months, but at a more gradual rate. That tapering off hasn't happened, yet.
"This is the worst labor market most of us have ever seen," said Scott Anderson, senior economist at Wells Fargo.
Even the good news in the report wasn't all that good: Employers slashed 190,000 jobs in the month, the sort of cuts found in a run-of-the-mill recession. That figure seems encouraging only when compared with job losses that ran at several times that rate earlier in the year.
The weak numbers confront the Obama administration with a difficult situation. The economy grew at a 3.5 percent rate in the third quarter, as measured by gross domestic product, and the president and his advisers have presented this as evidence that their policies to arrest the downturn are working.
But 15.7 million Americans were unemployed last month. And in mid-October, a majority of adults viewed Obama's policies as either making the economy worse (22 percent) or having no effect (35 percent), according to a Washington Post-ABC News poll.
The administration is pursuing policies that, while less ambitious than the $787 billion stimulus package passed in February, provide targeted help for the economy. On Friday, Obama signed legislation that extends unemployment insurance benefits by up to 20 weeks and renews an $8,000 tax credit for first-time home buyers while expanding eligibility.
But rather than offering a short-term fix for joblessness, the White House is now more focused on a longer term strategy for fueling the economic recovery. Speaking in the Rose Garden Friday, Obama said his economic advisers are weighing additional measures to create jobs, including new infrastructure spending, renovations to make buildings more energy efficient and additional support for U.S. exports.
Private economists said those initiatives are likely to have little immediate effect. "The impact will be pretty minimal," said Dean Baker, co-director of the Center for Economic and Policy Research. "They are good things to do. We should be spending more money weatherizing. It will employ some people."
Critics, especially on the left, are calling on the president to move faster and take initiatives that pay off sooner.
"Every day, it becomes more urgent that the federal government step up to the plate with bold actions to boost job creation," said Richard Trumka, president of the AFL-CIO. "Those actions should include urgently needed fiscal relief to state and local governments, community jobs programs, additional investments in infrastructure and green jobs and credit relief to small and medium-sized businesses."
Republicans, meanwhile, are using the weak employment numbers to assail the president's policies.
"They pledged unemployment wouldn't rise above 8 percent if their . . . stimulus package passed," said Sen. John Cornyn (R-Tex.). "Now Democrats are attempting to push through a job-killing health care bill that will spend another trillion dollars, cut Medicare, raise insurance premiums and tax the very small businesses that are the engine of economic growth."
Scattered among the 29 pages of the Labor Department report were a few encouraging hints. Temporary help providers added 33,700 jobs, the third consecutive month of increase. Employers often will bring on temps when they see increased demand for products, but are uncertain of whether it will last.
"You might have a small manufacturer need a couple of extra people because they're putting on a second shift or their order volume goes up, maybe they have people out sick," said Roy Krause, chief executive of Spherion, a large employment services firm. "Before they wouldn't put temps on at all."
"A lot of clients are saying, 'Come on temporarily, and if things work out and the economy improves, you have the first opportunity for a permanent position.' There wasn't much discussion about permanent jobs at all a few months ago."
But other signs weren't as upbeat. The average workweek was unchanged at 33 hours, showing that employers remain reluctant to bring back workers for more hours.
And the job losses continued to be broad based. Manufacturing and construction sectors shed the most jobs, with major cuts among retailers and leisure and hospitality companies as well. Government employment was unchanged.
Gains were strongest in education and health services sectors, which added 45,000 positions.