Current Unemployment Rate Hits Four-Year High

Posted by Kristina Cowan

The current unemployment rate edged up to 5.7 percent in July, hitting a four-year high, while nonfarm payrolls were down 51,000 jobs. This marks the seventh straight month companies have shed workers, but the national unemployment rate wasn't as severe as expected: economists had been anticipating 75,000 layoffs. Analysts on TV news reports offered mixed reviews of the Labor Department report, with several saying the news isn't great, but it shows a resilient economy weathering the storm.

Still, others say current unemployment rates conceal the true toll of the fickle economy, which can be seen in people working part-time jobs by no choice of their own. In July, the number of people working part time for economic reasons jumped by 308,000 to 5.7 million, an increase of 1.4 million over the last year. This includes people who want to work full time but resorted to part time because their hours had been cut, or they were unable to find full-time jobs.

Are Current Unemployment Rates Hiding Something Important?

John E. Silvia, chief economist of Wachovia in Charlotte, says the national unemployment rate gives a false impression of some adjustments that are occurring. “Hours cut is a big deal. People still have a job, but they are losing income.”

People working part time out of necessity now account for 3.7 percent of all those employed, up from 3 percent a year ago, and the highest level since 1995, according to The New York Times. The loss of hours has profoundly affected men, particularly Hispanic men. Of those forced to work part time between spring 2007 and spring 2008, 73 percent were men and 35 percent were Hispanic.

Many experts say the cuts in hours will only lead to more layoffs.

“The change in working hours is the canary in the coal mine,” said Susan J. Lambert of the University of Chicago, a professor of social service administration and an expert in low-wage employment. “First you see hours get short, and eventually more people will get laid off.”

Despite U.S. Unemployment Rates, Still No Recession

America has so far avoided a recession, traditionally defined as two consecutive quarters of contraction in gross domestic product. But economists say the steady erosion of the labor market is a sign many Americans are in a fiscal fix, making the recession argument more a matter of semantics.

Some other numbers worth noting from the July report on current unemployment rates:

• Over the last year, the national unemployment rate has increased by 1 percent.
• Payroll employment has fallen by 463,000 so far for 2008.
• In terms of industries, job losses in July continued in manufacturing, construction, employment services, wholesale trade, and the information industry, while health care and mining added jobs.
• Average hourly earnings rose, adding 6 cents, or 0.3%, to $18.06. Average pay is up 3.4 percent in the past year, much less than the 5 percent increase in consumer prices.

Links

• The Employment Situation: July 2008 (Bureau of Labor Statistics)
• Employed persons by class of worker and part-time status (BLS)
• Jobless Rate Climbs to 5.7% as 51,000 Jobs Lost in July (The New York Times)
• Unemployment Rate Hits 5.7% As U.S. Sheds 51,000 Jobs (The Wall Street Journal)
• Unemployment rate jumps to 5.7%, 4-year high (MarketWatch)
• Jobless rate highest in 4 years (Reuters)
• A Hidden Toll on Employment: Cut to Part Time (The New York Times)
• Current Unemployment Rate Steady at 5.5 Percent in June (The Salary Reporter)
• A History of U.S. Unemployment Rates (The Salary Reporter)
• Jobless claims surge to 5-year high (CNNMoney.com)
• Data quirk blamed for U.S. jobless claims spike (Reuters)

Comments

[Rich Milgram]

Although the unemployment rate may not be as high as some economists expected, we have still seen a steady decline in jobs over the last few months. As expected during times of economic uncertainty, employers have slowed hiring which has led to an 11 percent decline in the number of online jobs posted in Q2 2008, according to Beyond.com. Although many industries have been affected by the economy, Healthcare and IT jobs have continued to grow. In fact, many employers in the healthcare industry are offering generous salaries, signing bonuses, and flexible work schedules to attract and retain workers due to staff shortage.

[James Klich]

I have been out of a job for two years now. It is very hard to find any job in this current market. You just have to keep looking and hope the job market gets better.