Friday, May 8, 2009

539,000 jobs lost in April-furloughs and layoffs undermine stimulus spending

The Bureau of Labor Statistics announced this morning that the nation lost another 539,000 jobs in April increasing the unemployment rate to 8.9%, its highest rate since the early 1980s

It is a reflection of how bad the labor market is that some commentators are interpreting the loss of half a million jobs as a positive development.

The nation has lost 5.7 million jobs since the recession began in December 2007, with most of those coming in the last five months. The figure for March was revised upward Friday to 699,000, from 663,000.

Unemployment rates rose in April for adult men (9.4 percent) and blacks(15.0 percent). The jobless rates for adult women (7.1 percent), teenagers(21.5 percent), whites (8.0 percent), and Hispanics (11.3 percent) were little changed over the month.

In sign of continued labor market weakness, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 498,000 to 3.7 million over the month and has risen by 2.4 million since the start of the recession in December 2007.

The number of persons working part time for economic reasons referred to as involuntary part-time workers was essentially unchanged at 8.9 million; however, the number of such workers has risen by 3.7 million over the past 12 months.

The ranks of discouraged workers (workers who have given up looking for work) rose to 740,000 in April, more than double the 328,000 from a year earlier.

When discouraged workers, those who are part time for economic reasons, and the marginally attached are added to the officially unemployed, the unemployment/underemployment rate soars to 15.8%.

Those who see a silver lining in these numbers point to the decline in the rate of job loss and to the potential impact of federal stimulus dollars that are beginning to wash through the economy.

Losing half a million jobs hardly qualifies as good news. And the federal stimulus package was designed to save or create only 2.5 to 3 million jobs, about half of what the nation has lost since the Great Recession began.

Permanent layoffs like those at Chrysler's Kenosha engine plant and furloughs of state and city employees will undermine the impact of federal stimulus spending in Wisconsin.

Of equal concern - real hourly wages are falling. The economy cannot recovery unless there is increased demand for good and services. While stimulus spending will certainly slow the rate of decline in the next quarter, unless there is an additional stimulus bill it is hard to identify a source of demand that will lead to sustainable growth and an economic recovery.

1 comment:

Anonymous said...

Good points, however. The American market is facing demographic shifts in spending, and the mass debt consumption driven demand is not likely to level off for several years. The job losses are in part to the laggard realiztion of comparative advantages in other countries. This is not likely to change and american productivity, especiallt that of Wisconsinites always lags the developed insustrialized countries.