A Grim Employment Picture Could Get Grimmer
Federal Reserve chairman Ben Bernanke last month proclaimed the end of the recession. Those who might be preparing to break out the bubbly, however, will have to wait. An October 2 report from the Bureau of Labor Statistics paints a grim picture of the employment situation, and some experts believe it could get worse.
In September, the U.S. economy lost 283,000 jobs, pushing up the joblessness rate to a 26-year high of 9.8%. The largest losses were in construction, manufacturing, retail and government. “Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million,” the report notes.
Some economists are determined to be gung-ho. Michelle Meyer of Barclay Capital was quoted by The New York Times as saying: “Despite [the] disappointing employment report, we remain convinced that we are in the beginning stages of the economic recovery.” Former Fed chairman Alan Greenspan, however, is glum. Speaking on the television show “This Week with George Stephanopoulos” on October 4, he described the 9.8% unemployment rate as “pretty awful,” adding it will probably go up. “My own suspicion is that we’re going to penetrate the 10% barrier and stay there for a while before we start down.”
Former labor secretary Robert Reich, who now teaches public policy at the University of California, Berkeley, is also downbeat. The day the report appeared, he wrote in the Huffington Post: “Unemployment will almost certainly hit double digits next year – and may remain there for some time.” Pointing out that joblessness numbers don’t include part-time workers or those who are too discouraged to seek jobs, Reich says 10% unemployment “really means 20% underemployment or anxious employment.” One saving grace, he adds, is that these numbers would have been worse without the government’s stimulus package. “According to an analysis by the Economic Policy Institute, the stimulus is saving or creating between 200,000 and 250,000 jobs a month. Without it, job losses in September would have been nearly twice what they actually were.”
A Knowledge at Wharton article last February noted that job losses would worsen this year. Economist Christopher Portman said: “In terms of the global economy, 2009 will be the worst year since World War II and even since the 1930s. I don't know that the job losses we have seen so far show the full picture. Unemployment does lag [behind other indicators of economic performance], and even after we hit the bottom of this downturn, the job loss numbers will continue to rise.”
The reason, according to Peter Cappelli, director of the Center for Human Resources at Wharton, is that “the crisis is forcing many managers to focus only on the short term.” The global economy has weaknesses that have been lurking under the surface for years. The downturn has brought them to the forefront – and millions are paying the price.
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