Unemployment At Levels Not Seen Since 1983

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The nation's unemployment rate in February was 8.1 percent. The Labor Department reports more than 651,000 jobs were eliminated last month. Employers are cutting their payrolls and looking for other ways to cut costs as the recession takes a bite out of their sales and profits.

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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U.S. Unemployment Rate Jumps To 8.1 Percent

Employers cut 651,000 people from already thinning payrolls in February, pushing the unemployment rate to 8.1 percent, the Labor Department reported Friday.

The number was even worse than many economists had expected and is a substantial increase from 7.6 percent in January. The rate is the highest since 1983.

"Since the recession began, the rise in unemployment has been concentrated among people who lost jobs, as opposed to job leavers or people joining the labor force," said Bureau of Labor Statistics Commissioner Keith Hall.

Cutbacks came across economic sectors in a brutal reminder of how deep and broad-based the recession has become.

January's job cuts were revised to show a steep decline of 655,000, while December's payrolls losses were adjusted to 681,000, the deepest since October 1949. Since the start of the recession in December 2007, the economy has purged 4.4 million jobs, bleeding more than half of those in just the past four months.

"It's another very bad number in February," Nariman Behravesh, chief economist of Global Insight, told NPR.

"It still looks like the jobs market is in something of a free fall," he said. "None of these numbers provide any room for optimism or hope yet."

Hugh Johnson, the chairman and chief investment adviser of investment firm Johnson Illington Advisors, said Friday that leading indicators point to more job losses for "at least the foreseeable future."

"Let's call it three months, probably six months," Johnson told NPR. "I think the most optimistic outlook is that the economy will start to recover in the third quarter. And, candidly, the stock market's telling us that that may be too optimistic an outlook."

Some 168,000 manufacturing jobs were lost in February, after 257,000 positions in that sector were shed in the previous month. The construction industries lost an additional 104,000 jobs after 118,000 were cut in January.

The service industry slashed 375,000 positions after shedding 276,000 in January. Financial companies reduced payrolls by 44,000. Leisure and hospitality firms chopped 33,000 positions.

The few areas that were spared included education and health services, as well as government, which boosted employment last month.

President Obama, speaking to police academy graduates in Columbus, Ohio, later Friday called the 4.4 million job losses in the last 14 months "astounding," saying a cycle of job losses is "not the future I accept for the United States."

A total of 12.5 million workers are now classified as unemployed. In addition, the number of people forced to work part time for "economic reasons" rose by a sharp 787,000 to 8.6 million, the Labor Department said.

From NPR staff and wire service reports

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