U.S. job loss report is blow to still-fragile recovery

The president talks about green job initiatives and the recent employment numbers released by the government.
By Neil Irwin, Annie Gowen and Ben Pershing
Washington Post Staff Writer
Saturday, January 9, 2010

The job market remained in a deep funk in December, according to a government report Friday showing that employers view the economic recovery as too weak and too fragile to begin hiring again on any large scale.

The pace of layoffs has slowed sharply in recent months, but businesses still cut 85,000 net jobs in December, the Labor Department said. The unemployment rate was unchanged at 10 percent, but economists suspect this is only because hundreds of thousands of frustrated workers stopped looking for jobs.

With the jobless rate stuck in double digits and Democrats worried that the weak economy will prompt voters to turn on them in fall elections, the White House plans more public events in coming weeks to underscore its concern about jobs and the economy. On Friday, President Obama called the employment report a setback during his announcement of $2.3 billion in tax credits to support renewable energy, which the administration says will create 17,000 jobs.

"The road to recovery is never straight," Obama said, "and we have to continue to work every single day to get our economy moving again."

Senate Democrats, meanwhile, have begun crafting a bill to encourage job creation, which Democratic aides said will likely focus on small business, infrastructure spending and "green" energy. The House passed a $154 billion jobs bill in December.

The report was not without bright spots; for instance, revised figures for November showed that the nation had actually added 4,000 jobs that month. It was the first month of job creation since December 2007.

But the overall numbers were fundamentally disappointing, defying forecasters who had expected the number of jobs to hold steady and undermining hopes that better times are near for American workers. Half a year after the economy resumed growing, the job market remains stuck in neutral.

"Businesses just aren't set to hire, yet," said Mark Vitner, senior economist at Wells Fargo. "They've spent the last two years shrinking their operations to survive, and they're largely done with that, but they aren't seeing much reason to expand their operations yet."

Employers slashed positions more dramatically in the past two years, squeezing more productivity out of remaining workers. That has led many analysts to expect a substantial increase in the number of jobs in the early months of 2010, as companies must hire again just to keep up with demand for their products.

That still may happen, though the new report showed the deep sense of caution that remains among employers.

"What we're seeing is slow, incremental progress," said Paul Villella, chief executive of HireStrategy, an employment services firm in Reston. "There is more activity, but nobody is saying, I need to hire someone tomorrow."

One positive sign was the addition of 46,500 temporary jobs. That may presage overall job growth in the months ahead, as companies bring on temps to help meet demand while waiting to see whether improved business conditions last.

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