Unemployment At Levels Not Seen Since 1983
STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. I'm Steve Inskeep.
LINDA WERTHEIMER, host:
And I'm Linda Wertheimer.
As expected, the nation suffered heavy, heavy job losses last month. The Labor Department reports today that employment shrank by 651,000 jobs, and the unemployment rate jumped to 8.1 percent. That's the highest it's been since Ronald Reagan was president.
NPR's labor correspondent Frank Langfitt is with us in the studio. So Frank, what is the big message from the report?
FRANK LANGFITT: Well, I think the big message here is the recession is deepening, and workers are paying for it in the worst way.
You know, in the last four months, the labor market has actually contracted about 2.6 million jobs. That's a really big number. And it shows that things are clearly getting worse. We've seen losses across almost all sectors. And for the most part, it doesn't really matter what you do. Whether somebody works in an office or a factory, they're seeing job losses out there.
WERTHEIMER: That's interesting, because what started this all off was a crisis in subprime mortgages, then layoffs started in construction and real estate. What's driving the job losses now?
LANGFITT: A big factor right now, Linda, is consumer spending. After years of spending too much, sometimes more than Americans made, they're now really beginning to close their pocketbooks. The savings rate, it was once actually negative. Now it's up around 5 percent. That's the highest since the mid-1990s. This is what economists call the paradox of thrift. You know, if you and I save, that's a good thing. But if you and I and about a hundred million other more people begin to really save, it starves the economy of cash.
This morning I was talking to Stuart Hoffman. He's a chief economist with PNC Financial in Pittsburgh, and here's how he put it.
Mr. STUART HOFFMAN (Chief Economist, PNC Financial Services): This is a consumer-led recession. Frankly, we're caught in the grips of what I call a national financial anxiety attack.
LANGFITT: And, you know, that attack continued to take a toll last month on jobs. Let's look at retail: Once that was pretty strong - another 40,000 job losses there. Another powerful example is the automotive companies in Detroit. They're continuing to cut. People just aren't buying cars right now. GM sales were down more than half last month and again, the company's warning of bankruptcy and asking for more taxpayer loans.
WERTHEIMER: Frank, we're having a series of fairly depressing conversations here. Were there any bright spots in the report, any hope out there?
LANGFITT: Well, Linda, let me see what I can do here. One thing is not all sectors lost jobs. I guess that's what constitutes as good news these days. Education and government are still growing, so is health care. That's largely driven by demographics. Baby boomers are getting older. They need more health care, you know, help. We're seeing more jobs for, say, physical therapists.
Of course, if you're in health care, that doesn't mean you're safe. People still lose jobs in that sector. But overall, hiring is more than offsetting those loses. And the odds of getting a layoff are lower than in most professions.
The other bright spot, we hope, you know, is this stimulus package. Economists expect - they hope that the impact later this year, we'll begin to see a floor put under this economy.
And while the stimulus package may not create growth, over time, they're hoping that it'll stop this deepening decline in jobs. For months now, we've been looking for a bottom and hopefully, the stimulus will help the country find it.
WERTHEIMER: Recapping: The Labor Department has reported today that the nation's unemployment rate has risen to 8.1 percent.
Frank Langfitt, thank you very much.
LANGFITT: Happy to do it, Linda.
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