Friday, June 4, 2010

Weak job growth in May. Threat of double dip recession grows

431,000 net new jobs were created in May. But almost all of them, a whopping 411,000, were temporary U.S. Census jobs.

Private employers added only 41,000 new jobs in May, the lowest total since the start of the year.

Overall, the unemployment rate dropped to 9.7 percent, down from 9.9 in April., according to a report released this morning by the U.S. Department of Labor.

AFL-CIO President Richard Trumka said the low number of private-sector jobs is further evidence the recovery is still fragile.

"The Economic Recovery Act saved us from a second Great Depression, but it was not sufficient to power strong and sustained job growth, and its effects are expected to wane in coming months."

He called on Congress to do more to create jobs and sustain the recovery.

Most immediately, Congress must move quickly to extend unemployment benefits, restore health care benefits for the unemployed and provide aid to states to maintain jobs and vital services.

State and local governments shedded, 22,000 jobs in May. Without further action to offset state budget shortfalls, these job losses will undermine temporary gains from federal spending.

The underemployment figure, which includes those who are too discouraged to look for work or are working part-time out of economic necessity, dropped to 16.6 percent in May, from 17.1 percent in April-some 27 million U.S. workers without jobs or full-time work.

Wile temporary federal government jobs are rising because of the Census, permanent local government jobs are going away. State budget cuts could lead to as many as 900,000 jobs lost in 2010. And Congress decided last week to do nothing about that, cutting money in a jobs bill for the states to balance their Medicaid budgets.

Economists say monthly job creation must be 350,000 or more just to begin to make a dent in the unemployment rate.

The number of long-term unemployed workers continues to grow. In May, some 6.8 million U.S. workers were out of a job for 27 weeks or longer, up from 4 million a year ago. In May, 46 percent of unemployed workers had been without a job for 27 weeks or more.

The long-term jobless figures clearly show how important it is that Congress extend unemployment insurance (UI). Late last week, the House voted to extend unemployment benefits to millions of long-term unemployed workers who have been jobless longer than 26 weeks. But the Senate failed to vote on the measure before going on recess, meaning up to 1.2 million workers will have lost their unemployment insurance by the time the Senate returns from vacation.

Speaking earlier this week at Carnegie-Mellon University in Pittsburgh, Pa., President Obama said it is critical lawmakers extend unemployment insurance for several more months so that Americans who’ve been laid off through no fault of their own get the support they need to provide for their families and can maintain their health insurance until they’re rehired.

Extending unemployment benefits will not only support individual workers who have been unable to find jobs, but it will also stimulate the economy and help create more jobs. The money sent out in the form of unemployment insurance is quickly returned to the community, effectively supporting local economies. The median unemployed person has almost no cushion-only about $250 in liquid savings-at the time of job loss, resulting in a sharp drop in spending on essentials including food. Jesse Rothstein, chief economist for the U.S. Department of Labor summed up the nation’s jobless situation:

If you give money to someone who is unemployed, they are going to spend it the next day.

In his statement, Trumka adds:

America’s workers have paid far more than their fare share for the economic crisis - they’ve paid with their jobs, with their homes and with billions of dollars to Wall Street.

Today’s challenge is jobs. Unless Congress addresses this challenge with the focus and energy they brought to rescuing our banks, not only will a generation of workers be doomed to unemployment and the recovery itself put at risk, but dealing with our long-term fiscal problem will be all the more difficult.

2 comments:

Brian Rothgery said...

Congress needs to pass the Local Jobs for America Act, HR 4812. 161 co-sponsors in the House. Sherrod Brown will introduce the senate bill next week.

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