Unemployment stays at 9.6% as schools, governments slash jobs
Hiring growth in the private sector weakened and the economy lost a net
95,000 jobs in September, the Labor Department says, as the nation's
unemployment outlook remained dim in the final jobs report before the midterm
elections.
By Don Lee, Los Angeles Times
October 9, 2010
Reporting from Washington
A sharp falloff in local-government payrolls, mostly at public schools, added
an ominous new weight to the depressed labor market last month as the American
economy lost 95,000 jobs and the unemployment rate remained at 9.6%.
In the last monthly employment report before the Nov. 2 midterm elections,
which many see as a referendum on the economy, the Labor Department said Friday
that private employers added just 64,000 jobs in September — not nearly enough
to offset the large cuts in public payrolls.
Moreover, most of the private-sector job gains were lower paying, part time
or short term and were at businesses such as temporary help firms and eating and
drinking establishments. Manufacturing jobs dropped for the second straight
month, and construction fell back in September.
The poor jobs report increases the likelihood that Federal Reserve
policymakers, at their next meeting in early November, will launch a new round
of Treasury bond purchases to stimulate economic activity.
Investors were encouraged by that prospect, pushing the Dow Jones industrial
average above 11,000 on Friday for the first time since May.
The gain came despite warnings by some analysts that a new move by the Fed to
print hundreds of billions of dollars could drive down the value of and global
confidence in the dollar, as well as add to a brewing international dispute over
currency exchange rates and trade.
"We believe that [the possible Fed action] would be powerful medicine with
potentially severe side effects," Richard Hoey, chief economist at BNY Mellon
and Dreyfus, said in a note to investors.
Stocks have rebounded since early September partly because some recent
economic indicators — income, spending and unemployment insurance filings — have
been moving in a more positive direction.
But Friday's report throws cold water on the notion that the labor market is
improving. About 15 million people remain officially unemployed, and a record
9.5 million workers last month were in part-time jobs because they couldn't find
full-time work or because their employers had cut back their hours.
"I think the recovery itself is in some danger," said Ron Blackwell, chief
economist at the AFL-CIO, after reviewing the latest jobs report.
One major disappointment was the paltry job gains in the private sector,
which amounted to even less than in each of the previous two months and were
eclipsed by declines in public payrolls.
Surveys suggest that small businesses remain reluctant to add workers because
of weak sales and uncertainty about future taxes and policies. Corporations are
continuing to cut costs, in some cases by moving jobs overseas and, where
possible, substituting labor with equipment and machinery.
"For most businesses I talk with, even if they're doing expansion, they're
planning to do it with as few workers as possible," said Mark Vitner, a senior
economist at Wells Fargo in Charlotte, N.C. "The economy just lacks a spark
right now."
For much of this year, the month-over-month change in total jobs was
distorted by big bursts of hiring and dismissals of temporary census workers. In
September, the Labor Department said, the Census Bureau let go of 77,000 —
nearly all the remaining staff brought on this year for the decennial population
count.
But while that drop-off was expected, the big surprise was the loss of 76,000
jobs at local governments nationwide. Two-thirds of those were teachers,
administrators and other staffers at public schools.
Not since September 1981 has the nation seen such large cuts by local
governments in a single month.
State governments added to the woes by eliminating 7,000 jobs.
And private education services trimmed their payrolls by 15,000. All told,
the hit to public- and private-sector education last month was 73,000 jobs.
"It's huge. We're cutting one of the key things related to future
productivity growth," said Heidi Shierholz, an economist at the Economic Policy
Institute.
Although the local education cuts in September were largely a one-time event,
she said, layoffs of other workers at budget-strapped local and state
governments are far from over.
The National League of Cities estimated that even with the September job
losses, local governments were not halfway through the 480,000 layoffs projected
to occur from last year through next year.
Besides hitting schoolteachers, the cuts were borne most severely by workers
in public safety, public works and county social services, said Chris Hoene, the
NLC's director of research.
"They're good middle-class supporting jobs that have good benefits and
stability," he said, adding that their losses would be magnified because local
governments buy goods and services from the community and work closely with
local businesses.
As a rule of thumb, for every three local government jobs lost, one
private-sector job also vanishes.
President Obama, speaking about the economy Friday, said layoffs by state and
local governments would have been even worse without federal stimulus funds over
the last 20 months.
And he emphasized that the U.S. economy has seen nine straight months of
private-sector job growth, totaling more than 850,000 jobs, compared with a loss
of nearly that many in a single month when he took office last year.
Obama reiterated his support for ending the Bush administration's tax cuts
for wealthy Americans as well as for other proposals, such as giving permanent
status to corporate tax credits for domestic research and development and
pumping more money into transportation and other infrastructure projects.
Although private-sector employment prospects have improved from a year ago,
hiring remains too weak to bring down the unemployment rate and help the
nation's 15 million jobless workers, 6.1 million of whom have been without work
for more than six months.
Separate Labor Department data indicate there is one opening for every 4.6
jobless workers, compared with one for every 6.2 workers nearly a year ago.
With less than four weeks before midterm elections, Republican lawmakers used
the monthly jobs report one last time to push for an advantage in the upcoming
vote, sharply criticizing the Democratic leaders' handling of the economy, as
they have throughout the last two years.
"If the policymakers in the White House and Congress refuse to change their
failed economic policies, then perhaps it's time to change them. November is a
good time to start," Rep. Kevin Brady (R-Texas), the top House Republican on the
Joint Economic Committee, said in a statement.
In the September before the 2008 elections, the U.S. jobless rate was 6.2%.
The latest unemployment figure, 9.6%, would have been even higher were it not
for a stagnant labor force. Many people are not entering or returning to the
labor market, for instance, because they don't see much hope of landing a
job.
A broader measure of unemployed and underemployed workers, including
part-timers who can't find full-time work, rose to 17.1% last month from 16.7%
in August.
don.lee@latimes.com
Copyright © 2010, Los Angeles Times