Jobless Rate Highest Since 1983

The government says the nation's unemployment rate hit 10.2 percent last month, the highest since 1983. Economists had expected the figure to rise to 9.9 percent.

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Double digit unemployment has arrived. Unemployment has jumped above 10 percent for the first time since the early 1980s. Those government numbers were released today for the month of October. And they don't even count people so discouraged, they are no longer actively looking for work.

NPR's John Ydstie reports.

JOHN YDSTIE: Most analysts had expected that the recession would eventually drive the unemployment rate into double digits. It finally did. October's rate was 10.2 percent. And if you include discouraged workers, the number of unemployed now totals more than 18 million. Today at the White House, President Obama responded by signing a bill sent to him by Congress yesterday that extends unemployment benefits for as much as 20 more weeks.

BARACK OBAMA: The need for such a measure was made clear by the jobs report that we received this morning. Although we lost fewer jobs than we did last month, our unemployment rate climbed to over 10 percent, a sobering number that underscores the economic challenges that lie ahead.

YDSTIE: Today's unemployment report also showed overall U.S. businesses cut 190,000 jobs from their payrolls last month. While that's an improvement over September's job cuts, it still shows most employers are trimming jobs or still not yet hiring, despite evidence of growth in the economy.

DYKE MESSINGER: We are very much still hunkered down.

YDSTIE: That's Dyke Messinger, who runs a small manufacturing firm in North Carolina called Power Curbers. The company makes machines for paving and putting in curbs and gutters.

MESSINGER: The U.S. business, which is dependent on housing and commercial construction, is just playing awful.

YDSTIE: Exports to the Middle East, South America and Asia have kept his company going, says Messinger, but he's reduced his workforce by 40 percent and those who are left are only working about half time. Messinger believes he won't hire another permanent worker for at least two years.

MESSINGER: I am concerned that the real recovery, and let's say the real recovery is based upon a turnaround in the jobs numbers, is not going to come now until the end of 2011.

YDSTIE: Mark Zandi of Moody's Economy.com agrees this situation is discouraging. And, he says, even though it may appear the recession is over, because output is growing again, the coast isn't clear yet.

MARK ZANDI: As long as we're losing jobs, as long as businesses aren't hiring, it's very, very possible that, you know, consumers just stop spending and the economy slips back into the morass.

YDSTIE: Zandi says that to keep that from happening, government policymakers need to be aggressive and extend more elements of the stimulus package. The bill President Obama signed today, in addition to extending unemployment benefits, also continues and expands the home buyers' tax credit through next April and cuts some taxes for small businesses. But Zandi argues that because the private sector has not yet taken the baton from the government, even more needs to be done, including more help for state governments, he says.

ZANDI: If they don't get more help, there will be significant cuts in their employment by this time next year, program cuts and tax increases.

YDSTIE: Zandi says the measures he's recommending would probably cost the government another $100 billion. Today, President Obama said his advisers were considering a number of additional measures to provide stimulus to the economy. Republicans take a different view, commenting on the employment report today, Senate GOP leader Mitch McConnell of Kentucky said that more debt and more spending clearly has not worked.

John Ydstie, NPR News, Washington.

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Jobless Rate 10.2 Percent, Casts Doubt On Recovery

Job-seekers attend a job fair in Livonia, Mich., on Wednesday. i i

hide captionJob-seekers attend a job fair in Livonia, Mich., on Wednesday.

Paul Sancya/AP
Job-seekers attend a job fair in Livonia, Mich., on Wednesday.

Job-seekers attend a job fair in Livonia, Mich., on Wednesday.

Paul Sancya/AP

Little over a week after the government said the economy has begun to grow, the unemployment rate climbed to 10.2 percent, the first time it hit double digits since 1983. That, along with the loss of an additional 190,000 jobs in October, shows the economy is still struggling to emerge from recession.

The largest job losses were in construction (down 62,000), manufacturing (down 61,000) and retail (down 40,000), the Labor Department said Friday.

President Obama said the 10.2 percent unemployment figure is "a sobering number that underscores the economic challenges that lie ahead."

His immediate goal when he assumed office was to stop the economy's "free fall," he said, adding that the economy's growth last quarter showed success on this front.

"But history tells us that job growth always lags behind economic growth, which is why we have to continue to pursue measures that will create new jobs," Obama said.

Private economists had forecast that the unemployment rate would rise to 9.9 percent and that jobs would drop by about 175,000 in October. The economy grew at a 3.5 percent rate in the third quarter, after contracting for four straight quarters, but the labor market continues to be a sign of weakness.

"Most of the economic data does continue to indicate that we're emerging from the recession, and for most of this year the pace of job loss has been narrowing," said Alan Levenson, the chief economist for T. Rowe Price. "That has not been the case over the last two months, but I anticipate that over the next two months we'll continue to see smaller rates of decline in employment, and that job growth will resume early next year."

It's the 22nd straight month that the U.S. economy has shed jobs, the longest stretch on records dating back 70 years.

Unemployment Even Worse Than It Seems

Counting those who have settled for part-time jobs or who have stopped looking for work, the unemployment rate would be 17.5 percent, the highest on records dating from 1994.

Levenson said jobs in construction are being weighed down by "the continued right-sizing of residential construction and accelerating weakness in nonresidential" building. He said it's not surprising to see continuing job losses in the retail sector because too many stores were built in response to overzealous consumer spending fueled by borrowing.

A Tale Of Two Surveys

The Labor Department's monthly unemployment report is based on two surveys. One is a survey of households, and the unemployment rate is established based on this data.

The other is a survey of businesses, which is used to measure the number of jobs cut or added to payrolls. Typically, the payroll survey, which showed a net of 190,000 jobs lost in October, is seen as the key indicator for forecasting the economy's health.

But because the U.S. is emerging from a recession, the household survey may be a better reflection of economic conditions. If that's the case, it suggests that the economy is quite weak because the unemployment rate of 10.2 percent is at its highest point since April 1983, when the U.S. was also in a very deep recession.

—John Ydstie

Friday's report is the first since the government said last week that the economy grew at a 3.5 percent annual rate in the July-September quarter, the strongest signal yet that the economy is rebounding. But that isn't fast enough to spur rapid hiring, raising the specter of a jobless recovery.

"There is a massive disconnect between the improvement in GDP and what's going on in the labor market," said Robert Stein, senior economist for First Trust. One of the reasons for this is an increase in workplace productivity spurred by technology and business efficiencies. Stein said some companies may be concerned about making additional hires in light of pending health care legislation. Firms may be worried that labor costs will rise due to an increase in insurance rates.

"You need explosive growth to take the unemployment rate down," said Dan Greenhaus, chief economic strategist for New York-based investment firm Miller Tabak & Co.

Greenhaus said the economy soared by nearly 8 percent in 1983 after a steep recession, lowering the jobless rate by 2.5 percentage points that year. But the economy is unlikely to improve that fast this time, as consumers remain cautious and tight credit hinders businesses. In fact, many analysts expect economic growth to moderate early next year, as the impact of various government stimulus programs fades.

Many economists also worry that persistently high unemployment could undermine the recovery by restraining consumer spending, which accounts for 70 percent of the economy.

'A Really Deep Jobs Hole'

One sign of how hard it still is to find a job: The number of Americans who have been out of work for six months or longer rose to 5.6 million, a record. They account for 35.6 percent of the unemployed population, matching a record set last month.

"We're in a really deep jobs hole," said Chad Stone, chief economist at the Center on Budget and Policy Priorities. "The recovery legislation was really important in getting us to the point where a recovery seems to be starting, but we'll need the additional support for the recovery that will come from renewing the unemployment insurance benefits for next year."

Stone is also concerned about the impact of state budget cuts. States have to balance their budgets, but when they experience falling revenue, they have to trim programs or raise taxes. Stone said that's the opposite of what they should be doing in a weak economy.

Stone said the pace of job losses has been under 200,000 for the past three months — a favorable sign compared with earlier this year, when that number was over 600,000.

Extending A Lifeline

Despite this dramatic decline, he said, the U.S. continues to shed jobs. Since the start of the recession, 7.3 million jobs have been lost. But because of population growth, Stone said, the economy would need to add another 2 million jobs — for a total of nearly 10 million — to return to pre-recession levels.

Congress sought to address the impact of long-term unemployment this week by approving legislation extending jobless benefits for the fourth time since the recession began. The bill adds 14 to 20 extra weeks of aid and is intended to prevent almost 2 million recipients from running out of unemployment insurance during the upcoming holiday season.

In the summer of 2008, unemployed people had access to 26 weeks of emergency benefits. The bill signed Friday increases it to 99 weeks. Even though Obama signed the legislation Friday, the whole package of unemployment insurance benefits from the Recovery Act will have to be renewed in order for these benefits to extend to people who become unemployed in 2010.

With additional reporting from NPR staff and wires

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