October 3, 2008
Jobs decline for ninth month in a row as labor market recession deepens
We interrupt the financial meltdown to remind you that the nation’s payrolls have been contracting for nine months in a row.
The nation’s employers continue to cut payrolls, with jobs down by 159,000 in September, the ninth consecutive month of job losses according to today’s report from the Bureau of Labor Statistics.
Unemployment was unchanged over the month, as an increase in the number of the jobless (up 101,000) was offset by a decline in the labor force (down 121,000). The underemployment rate, a more comprehensive measure of job-market slack, jumped to 11%, the highest level since in over 14 years. As of last month, one in nine persons is either unemployed or underemployed.
So far this year, payrolls are down 760,000 overall and 969,000 in the private sector (the latter loss began in December). Unemployment, at 6.1%, is up 1.4 points over the past year, while underemployment is up 2.6 points. Over the past year, the unemployment rolls have expanded by 2.2 million, to 9.5 million, the highest number of unemployed since December of 1992.
While the overall unemployment rate was unchanged last month, African American unemployment rose from 10.6% to 11.4%, driven by an increase among black men from 11.2% in August to 12.9% in September (the rate for black men is more than twice that of white men (5.9%)). As is often the case in a recession, black joblessness is rising much more quickly than that of the overall workforce. Since June, black unemployment has jumped 2.2 percentage points, from 9.2% to 11.4%, compared to a 0.6 point increase in the overall rate.
Two serious problems in today’s job market are 1.) the lack of job creation, along with increased layoffs, means that job seekers are stuck in unemployment and unable to find work, and 2.) over 6 million workers who have kept their jobs are unable to find their desired hours of work.
The first problem–extended unemployment spells, as measured by the share of unemployed who have been jobless for at least six months–increased to 21.1% in September, the highest long-term share since March of 2005. The fact that so many workers are stuck on the jobless rolls calls for an immediate policy response to help them, as discussed below. The fact that Congress is about to vote on a $700 billion package to bailout Wall St. makes this policy response to directly help Main St. that much more important.
The second problem–involuntary part-time work–is evident in the increase in the number of persons working part-time who would prefer full-time work, up over 300,000 since last month and 1.6 million over the past year. Over 6 million workers were involuntary part-timers last month, the highest number since December 1993.
The loss of jobs and hours is also reflected in slower weekly wage growth. Weekly earnings for most workers, before accounting for inflation, rose 2.8% over the past year–September 2007-September 2008–well below recent inflationary readings. In other words, paychecks continue to lag behind prices, contributing to the squeeze on working families.
Job losses occurred across most industries. Factory jobs were down by 51,000 last month, led by declines in autos and auto parts. Persistent losses in the factory sector–this is the 27th consecutive month of job losses–show no signs that the recent improvement in the U.S. trade balance has led to either gains or even slower losses in manufacturing employment.
Service employment was also down, as private services (excluding government) shed 91,000 jobs in September. Likely reflecting weak consumer spending in the third quarter of this year, retail trade employment was down 40,100, with large losses in auto dealerships (down 8,600) and department stores (down 10,800).
Financial services, beset by the implosion of the real estate bubble and the credit crunch, shed 17,000 jobs last month and 110,000 over the past year.
Only health care and government continue to reliably generate job growth (and given the large government presence in health care markets, these two sectors are related). Over the course of this year, while overall payrolls have shed more than three-quarters of a million jobs, health care employment is up by 269,000.
Once a year, the Bureau of Labor Statistics revises the establishment data to reflect a more accurate count of the number of jobs in the labor market. The preliminary estimate of this benchmark, announced today, was a small downward revision of 21,000. This means that as of March 2008, there were an estimated 21,000 fewer jobs than previously reported. Preliminary estimates for the private sector indicate a larger downward revision of 81,000. If these preliminary estimates hold, it will mean that private sector employment has declined by over 1 million jobs since November of 2007.
Finally, a critically important policy intervention exists to address the stress in the current job market. This past summer, the Emergency Unemployment Compensation (EUC) program was signed into law, providing up to 13 weeks of federally funded extended jobless benefits beyond the 26 weeks of unemployment insurance provided by the states. The first benefits under the EUC were distributed on July 13th, and an estimated 800,000 workers who took up these benefits will be left without any unemployment compensation when their EUC runs out on Sunday.
As today’s report confirms, workers face a much more difficult labor market than they did when EUC was first enacted–between July and September alone, the unemployment rate increased by four-tenths of a percent (representing nearly 700,000 additional unemployed workers), and the economy shed 232,000 jobs.
In past downturns like this, Congress has a record of multiple interventions in unemployment compensation programs. Along with their vote on the Wall St. bailout, the House votes today on the expansion of EUC. If lawmakers truly want to balance their legitimate concerns for improving credit markets with those of working families struggling to deal with long-term joblessness, it would be unconscionable for them to leave town without passing this expansion.
To view archived editions of JOBS PICTURE, click here.
The Economic Policy Institute JOBS PICTURE is published each month upon release of the Bureau of Labor Statistics’ employment report.
EPI offers same-day analysis of income, price, employment, and other economic data released by U.S. government agencies. For more information, contact EPI at 202-775-8810, or visit us on the Web at www.EPI.org.