Another 263,000 jobs were lost in September, the Bureau of Labor Statistics announced this morning, far above the consensus of experts. Last month, the revised figures show, there were 201,000 jobs lost. The unemployment rate rose from 9.7% to 9.8%.
Click for a larger version of this Calculated Risk chart of job losses in the 11 post-World War II recessions.
The latest figures reversed what had been a steady downward trend in job losses since spring. In the 21 months since the downturn began, there has been a net loss of 7.6 million jobs. Currently 15.1 million Americans are officially out of work. Another 11.4 million are unemployed because their unsuccessful search for a job has discouraged them, or they are underemployed because they want full-time work and can only obtain part-time hours.
The consensus of experts surveyed by Bloomberg last Friday had put the expected loss at 170,000. But after the privately compiled ADP National Employment Report released Wednesday contained higher than expected job losses for September, the 84 experts tweaked their estimates, which ranged from 100,000 to 260,000. That boosted their consensus – the median of all their estimates – to 175,000. This still fell far short of the BLS figures.
The once-all-but-ignored alternative measure of unemployment and underemployed – U6 – rose from 16.8% to 17%. That figure includes jobless Americans who have become discouraged and those working part-time but desire full-time jobs, a total of 26.5 million. Without the government’s economic stimulus, which was fiercely opposed by Republicans, the situation would be far worse. But the latest figures give more credibility to those economists and other observers who have long questioned whether the stimulus as currently constituted can sustain a recovery.
In another much-watched statistic showing weakness in the labor market, the average workweek for production and nonsupervisory workers fell back to 33 hours, a record low.
The number of long-term unemployed - workers who have gone jobless for 27 weeks or more rose - by 450,000 to 5.4 million. In September, 35.6 percent of unemployed persons had been jobless for 27 weeks or more.
The official unemployment rate for whites was 9.0 percent for September, for blacks 15.4 percent, for Hispanics 12.7 percent, and for Asians 7.4 percent. The rate for women of all races was 7.8 percent, for men 10.3%. Count in the discouraged and the underemployed, and those breakdowns are far worse, too.
Most economists and other expert observers believe that the quarter just ended and the quarter that we have just begun will show growth, perhaps in the 3% to 4% range. In the past that’s usually meant a rise in hiring. But in recovery periods following the previous two recessions, there’s been a disconnect: an extremely weak labor market. Those recessions were comparatively mild. What we’ve seen since December 2007 is the weakest employment market since the Great Depression. And it’s not likely to go away without additional stimulus no matter what the deficit hawks in both parties have to say.
Chances are that unemployment will continue to rise to 10% or beyond by year’s end and well into 2010. This is in great part because companies currently are utilizing their production capacities at very low levels. Even if their delivery orders increase, they can get more productivity from current employees. All this could easily mean structurally high unemployment for a long time – that is, several years – because employers have seen no need to hire as many new workers.
If this, plus other observations about spending resistance among consumers and debt overhang pan out, the United States could be in for its third consecutive oxymoronic "jobless recovery." That might mean higher GDP and higher profits but long-lasting pain for poor and middle-class Americans already suffering the longest economic downturn since you-know-when. As New Deal Democrat pointed out regarding the disappointing ISM report at the bonddad blog Thursday, there are other statistics contributing to worries that we may be in for a repeat of the unemployment troubles that followed the two previous recessions in 1990-91 and 2001. The downward shift in ISM numbers could be a one-month fluke, or not.
Advance Realty and Rutgers produced an issue paper last month, America’s New Post-Recession Employment Arithmetic. Lots of charts and graphs, a summary of the present and predictions of the future:
• The combination of a weak economic expansion sandwiched between two recessions (2001, and 2007–2009) produced what will be a lost employment decade. As of August 2009, the nation had 1.3 million (1,256,000) fewer private sector jobs than in December 1999. This is the first time since the Great Depression of the 1930s that America will have an absolute loss of jobs over the course of a decade.
• To put this new millennium experience into perspective, during the final two decades of the twentieth century, the nation gained a total of 35.5 million private-sector jobs. During the current decade, America appears destined to lose more than 1.7 million private-sector jobs.
• Because of the severity of the 2007–2009 recession employment losses (–7.0 million private-sector jobs as of August 2009), the United States faces a significant employment deficit as it confronts the realities of a post-recession future.
• The U.S. Bureau of Labor Statistics projects the nation’s labor force to grow by approximately 1.3 million persons per year between 2006 and 2016. Therefore, the nation has to add 1.3 million total jobs per year— consisting of private-sector and government payroll employment as well as contract (nonpayroll) employment—simply to accommodate a growing labor force [as consequence of population growth].
• This 1.3 million annual increase in the labor force means that in terms of private-sector payroll employment, the nation has to create an estimated 920,000 jobs per year. Adding this to the actual private-sector job losses accumulated during the 20 months (to date) of recession equates to an August 2009 employment deficit of 8.6 million jobs. Given conservative estimates of further employment declines (even if the recession ends in the third quarter of 2009) and the continued increase in the labor force, the nation’s employment deficit could approach 9.4 million private-sector jobs by December 2009.
• Erasing this deficit will require substantial and sustained employment growth. Even if the nation could add 2.15 million private-sector jobs per year starting in January 2010, it would need to maintain this pace for more than 7 straight years (7.63 years), or until August 2017, to eliminate the jobs deficit! This is approximately 50 percent greater than the length of the average post–World War II expansion (58 months).
Of course, the study doesn’t deal with the real job deficit. All those discouraged and part-time workers. The stagnant wages. The dwindling benefits. Nor, of course, is there any mention of the perniciousness of the long-term upward transfer of wealth. Nor, most important of all, how to generate a sustainable global economy within a sustainable environment that isn’t bludgeoned by reckless overconsumption.
But, under the study’s limited definition, the job deficit could be eliminated somewhat sooner than it suggests. While one must look askance at the quality of some of the 20.6 million private sector jobs created during Bill Clinton’s two terms – which covered four-fifths of the longest economic expansion in U.S. history – there were 2.57 million jobs created in each of the years he was in office. If that could be replicated, the narrowly defined job deficit could be overcome in a mere five years, that is, by January 2015. Just in the time for the next recession.