Unemployment Rate Jumps as Employers Shed Jobs

Nervous employers slashed nearly 50,000 jobs from their payrolls in May, sending the unemployment rate up to 5.5 percent for the month. It was the biggest monthly increase in the rate in 22 years.

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ROBERT SIEGEL, host:

And now we go on to that unemployment report, which can be summed up simply as: more people are looking for work and they're having a harder time finding it. In May, the unemployment rate jumped by half a percentage point, to 5.5 percent; that's the biggest monthly increase since the mid-1980s.

And as NPR's Frank Langfitt reports, it is also a strong sign that the country could be in recession.

FRANK LANGFITT: The economy shed 49,000 jobs in May. That's the fifth month in a row the labor market has declined, but it was the spike in the unemployment rate that set off alarms. Analysts say one reason the unemployment rate rose so much is because more students went hunting for jobs than usual.

John Sylvia is chief economist at Wachovia. He says the weak economy and rising prices are pushing more students into the job market.

Dr. JOHN SYLVIA (Economist): The whole family needs money and/or the parents just can't afford the spending money that they may have given the teenagers last year or the year before, especially with gas. And when you start telling the teenager he has to pay for the gas money going to the restaurant, that adds up, and a lot of parents are saying we just don't have that kind of money.

LANGFITT: And today's report shows another troubling trend. People who have lost jobs are taking longer to find new ones. Between April and May, the number of people who had been out of work for more than half a year increased by 200,000.

John Sylvia says that's because the job market is changing, especially in areas like manufacturing. He says that back in the 1960s...

Mr. SYLVIA: The worker lost the job, but oftentimes was called back to the same position two or three months later.

LANGFITT: Today, though, improvements in technology and outsourcing have eliminated some jobs for good.

Mr. SYLVIA: Oftentimes when a manufacturing worker loses that positions, those are permanent job losses. The automobile industry is a very good example of that.

LANGFITT: But it's not just laid-off autoworkers who are struggling out there. Michael Coddle(ph) was out driving today around New Jersey looking for work.

Mr. MICHAEL CODDLE: Believe it or not, I'm working on trying to get a job as a driving instructor because I can't find anything in my field.

LANGFITT: Coddle's field is information technology. He was laid off more than a year ago. He says he's applied for 75 jobs, but competition is intense.

Mr. CODDLE: The people that I've interviewed with have told me that they are so overwhelmed with the amount of applications that they have, they've never seen such a huge amount of applications come in.

LANGFITT: Coddle received unemployment insurance from the government. It was about $720 every two weeks, but that ran out in March. So Coddle says he's turned to family.

Mr. CODDLE: Thank God for my parents, is all I can say. They've helped out financially. They've given us food, you know, and I feel bad because I'm 40 years old, my wife is 37. And I've never had a problem getting a computer job before, ever.

LANGFITT: People typically receive unemployment insurance for 26 weeks. But with more struggling to find work, Democrats in Washington are pushing to extend benefits another 13 weeks.

Andy Stettner is deputy director of the National Employment Law Project, an advocacy group for the unemployed.

Mr. ANDY STETTNER (National Employment Law Project): The job market is so hard that people just need that extra time to find work. And the economy needs the extra dollars.

LANGFITT: But so far the White House has opposed such a move. In a statement last month, when the unemployment rate still stood at just 5 percent, the administration said the current program provided enough benefits. Asked today if the White House would reconsider, a spokesman refused to speculate.

Frank Langfitt, NPR News, Washington.

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8.5 Million Out of Work in May as Jobless Rate Soars

The unemployment rate jumped by half a percentage point in May, with 8.5 million people out of work last month. The jump from 5 to 5.5 percent is the largest monthly increase since February of 1986.

The Labor Department numbers are also further evidence that the country may be in a recession.

The U.S. economy lost nearly 50,000 jobs last month; May was the fifth straight month in a row in which the job market has shrunk.

The last time the U.S. job market shrank for five consecutive months was in 2001 and 2002, when the nation was in recession.

Stuart Hoffman, an analyst with PNC Financial in Pittsburgh, says the unemployment rate jumped because more people continued to lose jobs — particularly in manufacturing and construction.

And more people came into the job market looking for work, but weren't able to find any.

That was due in part to hiring freezes being put in place in much of the country, but it also stemmed from continued layoffs — "particularly housing and anything related to housing," Hoffman said.

While today's numbers were pretty bleak, there was some good news. Health care continued to add jobs. And while the unemployment rate did jump to 5.5 percent, that's relatively low by historical standards.

Still, Hoffman said the report shows that the country is in recession.

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