Job Loss Surprise Shows No Recovery Yet

More workers than there are people in all of Miami were put out of work in June, a development that surprised economists and sent U.S. financial markets into a tailspin. The Bureau of Labor Statistics reported that 467,000 jobs were lost last month, pushing the unemployment rate to 9.5 percent, a 26-year high.

A Bloomberg survey before the numbers were released this morning said economists were expecting a decline of about 367,000 jobs. Other surveys suggested an even lower number. Either way, the report was bad news and investors reacted by selling stocks, pushing prices lower the day before U.S. markets close in observance of Independence Day.

Monster Worldwide, which makes its money when companies are hiring, lost $1 on the earnings report. It was trading at $10.92 a share at midday in New York.

The job loss barely nudged the unemployment rate, which rose only one-tenth of a point from May. That suggests discouraged and long-time unemployed workers are taking themselves out of the labor market.

The BLS report says: “The number of long-term unemployed (those jobless for 27 weeks or more) increased by 433,000 over the month to 4.4 million. In June, 3 in 10 unemployed persons were jobless for 27 weeks or more.” These are still included in the unemployment rate. However, the report notes that about 2.2 million more Americans are out of work, want to work, but have grown so discouraged that they have largely given up. These workers are not included in the unemployment figures.

When discouraged workers are included in the calculations, the unemployment rate is actually 10 percent nationally.

The unemployment rate is likely to rise as jobs continue to be shed. Christina Romer, chair of the President’s Council of Economic Advisers, told CNBC, “Employment and unemployment are lagging series. So we are in for some more job losses.”

Most of the other indices that track jobs and public confidence support Romer’s view. The Monster Index, released the other day, was essentially flat from May, while the number of jobs posted online declined after a robust jump the month before. Consumer confidence was down about 10 percent from the previous month.

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In the BLS report itself there is evidence that while monthly job losses have eased since the winter, the economy is not yet in recovery. The average workweek is now at the fewest hours since the data was first collected in 1964. On average, those production and non-supervisory workers still employed are putting in only 33 hours a week. That’s due to furloughs, reduced hours, and shortened workweeks, which have the effect of cutting wages, even though the government reports that hourly income has increased 2.7 percent in the last year.

Job losses were worst in the manufacturing sector, where the auto industry slump was largely responsible for the decline of 136,000 jobs. The professional and business services industry contributed 118,000 losses in June, while the construction industry shed 79,000 jobs. The balance came from retail, information (which includes the publishing industry and is not just IT), and finance.

Health care added 21,000 jobs in June.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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1 Comment on “Job Loss Surprise Shows No Recovery Yet

  1. The unasked question in this and many similar articles posted on this topic is “What is being done at the current time that could causing this recession and unemployment streak to continue?”

    Historically, economic recoveries are slowed when businesses are unsure of what the rules on the playing field will be like… This situation is most commonly presented in the form of some kind of change or creation of government legislation. In this case, the Federal government has effectively put a clamp on the credit markets by scrutinizing and closing down banks, selectively bailed out certain financial companies, bought out an auto manufacturer & oversaw its sale to a foreign entity, increased spending and the national debt three-fold, and is pursuing a universal health plan that will most certainly impact the cost of doing business.

    Political ideology aside, the fact (well supported by historical data) is that the more legislation Congress creates that directly affects business, the longer businesses will wait to see how they are affected before getting back into the game.

    Suddenly, the hiring freeze and rising unemployment rate makes sense.

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