TOPICS > Economy

Gloomy Job Numbers Signal New Woes for Economy

February 6, 2009 at 6:00 PM EST
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U.S. employers cut 598,000 jobs in January, bringing the unemployment rate to 7.6 percent, in another sign of the deepening recession. It was the worst one-month job loss since 1974.
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JIM LEHRER: The recession wiped out jobs by the hundreds of thousands in January, and the unemployment rate topped 7.5 percent. The government released those numbers today, as the U.S. Senate struggled to bring the stimulus debate to an end.

Ray Suarez has our lead story report.

RAY SUAREZ: The last time a jobs report was this bad, Gerald Ford was in the White House and President Barack Obama was 13 years old. The 598,000 jobs lost in January are the most in a month since December of 1974.

As of today, almost 12 million Americans are counted as out of work; 3.6 million of them have lost jobs since the recession began in 2007; and nearly 2 million of those jobs have disappeared just since November.

Keith Hall heads the Bureau of Labor Statistics, which tabulated January’s findings. He laid out the numbers this morning.

KEITH HALL, Commissioner, Bureau of Labor Statistics: The labor market continued to weaken dramatically. Job losses in January were large and widespread across the major industry sectors. Now, the past three months we’ve had job loss of over 500,000, nearly 600,000 job loss, so you have a pretty significant deepening and broadening of the deterioration in the labor market.

BARACK OBAMA, President of the United States: Members of the Senate are reading these same numbers this morning.

RAY SUAREZ: A short time later at the White House, President Obama used the report to insist that Congress finish work on an economic stimulus plan.

BARACK OBAMA: These numbers demand action. It is inexcusable and irresponsible for any of us to get bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work.

Now is the time for Congress to act. It’s time to pass an economic recovery and reinvestment plan to get our economy moving.

This is not some abstract debate. It is an urgent and growing crisis that can only be fully understood through the unseen stories that lie underneath each and every one of those 600,000 jobs that were lost this month.

Seeing more job seekers

Dai Nguyen
Fairfax County Skill Source
In 2008, we had over 16,000 visits to this center alone. That's twice the number that we saw in 2007 [...] I think that's a strong indicator that things are tough out there.

RAY SUAREZ: This is one of those places where the jobs crisis is not abstract, not just blinking percentage numbers on the TV screen. It's an employment center in Falls Church, Virginia, and supply and demand are definitely working at cross purposes. Over the last several months, they've seen a steady increase in traffic and fewer and fewer employers looking to fill jobs.

And with the national unemployment rate now at 7.6 percent, it's clear, here in northern Virginia, with a strong economy, jobs are scarce and getting harder to find.

Dai Nguyen is director of the center.

DAI NGUYEN, Program Manager, Fairfax County Skill Source: In 2008, we had over 16,000 visits to this center alone. That's twice the number that we saw in 2007. Since September of 2008, we've had close to 8,000 visits to this center.

RAY SUAREZ: So doubling and then doubling?

DAI NGUYEN: Yes, I think that's a strong indicator that things are tough out there. When we see the number of people that are coming in, they're staying here longer. They're looking for more resources. When we have job fairs, we're seeing twice, sometimes three times the number of people showing up for jobs than employers who are hiring. In the past, they would coming out, filling 20 to 30 positions. Now they're filling two to three positions.

RAY SUAREZ: Anabell Landa has been looking for work for the last three months. She'd like to teach Spanish, but for the time being...

ANABELL LANDA: I am applying to be a bus driver now. And I'm in the process of getting that kind of job, and then I will see. I'm doing that because that's what is available right now, and maybe it's going to be the door for other things.

RAY SUAREZ: Help may be on the way, but how it arrives and in what form remained before the Senate. The package now being debated would cost nearly $940 billion. Majority Leader Harry Reid laid out the stakes this morning.

SEN. HARRY REID (D-NV), Senate Majority Leader: Democrats and Republicans must decide today whether they will work together to come up with a plan and join the president on this road to recovery.

RAY SUAREZ: Reid's opposite number, Minority Leader Mitch McConnell, again decried the size of the package.

SEN. MITCH MCCONNELL (R-KY), Senate Minority Leader: Americans can't afford a trillion-dollar mistake, however well-meaning the intent. And at this point, that's what many of us think this bill would be.

RAY SUAREZ: But the real effort to craft a bill was taking place away from the Senate floor. A group of centrist senators met in the office of Pennsylvania Republican Arlen Specter. They focused on finding a middle ground that could garner 60 votes, enough to overcome a Republican filibuster.

The group met again late this afternoon to discuss the shape of the stimulus bill, but Republican Susan Collins of Maine said she was less optimistic than when the day began.

And as senators traded ideas, the private sector weighed in, too. Beth Ann Bovino of Standard and Poor's said there are particular areas the package should focus on.

BETH ANN BOVINO, Economist, Standard and Poor's: I think, actually, investment for certainly technology areas, health care, and education, particularly education, might be something that would be a long-term benefit for the U.S.

RAY SUAREZ: Health care and education added to their workforces last month, according to today's jobs report, but those were the lone bright spots.

Worst three months since 1945

Lisa Lynch
Brandeis University
A lot of records were broken today on this employment report, but they're not the good kinds of records to break.

JIM LEHRER: And Jeffrey Brown has more on the new jobs numbers.

JEFFREY BROWN: And to help me with that, I'm joined by Lisa Lynch, a labor economist, and dean of the Heller School for Social Policy and Management at Brandeis University.

Well, let's start with the broad numbers. Deep and wide, as we just heard in Ray's report, but are there particular industries hit hard?

LISA LYNCH, Labor Economist: Well, in today's report, just carnage goes across pretty much all of the sectors except for the education and health care sector.

But two stand out in the report, and that's the manufacturing sector and the construction sector. We had over 200,000 jobs lost in the manufacturing sector in January, and that's the biggest monthly decrease in manufacturing since the 1980s, and that was a deep recession, where we saw the unemployment rate top 10 percent.

The other sector where we saw deep job loss was in the construction industry: 111,000 jobs were lost in January in construction. And that's adjusting for the fact that we're in the month of January, and so there are fewer jobs because of the weather.

And in the construction industry, basically all of the employment gains that we saw with the housing boom from 2003 to 2007 have almost completely been wiped out as this recession has played out in the construction...

JEFFREY BROWN: Now what about -- excuse me -- what about the dramatic speed of the cuts here? Because we now know that this recession has been going on for more than a year, in fact, but most of these cuts -- and certainly the dramatic increases within the last few months. What does that tell you about businesses?

LISA LYNCH: Well, you know, we've seen an acceleration in job loss in the number of workers that are losing their jobs, but we're also seeing in this report an increasing number of workers who are still employed but working fewer hours as employers are reducing hours.

So there's a pattern here. We're seeing employers laying off temporary workers, cutting hours of workers who are in employment, and then, when things get really bad, then shutting down operations and cutting quite aggressively on the employment front.

The three-month job loss that we've experienced from November, December, and January is the biggest three-month job loss that we've had in this country since 1945. So a lot of records were broken today on this employment report, but they're not the good kinds of records to break.

Some groups hit harder than others

Lisa Lynch
Brandeis University
Unemployment is distributed across all the different sectors of the economy, but there are certainly certain demographic groups that are experiencing a much harder time than others.

JEFFREY BROWN: And when you parse the levels of vulnerability here, is it still the case that those with less education, some minority groups, are they most vulnerable still?

LISA LYNCH: Now, the unemployment rate for college graduates is up. It was at 2.1 percent a year ago, and now it's up to 3.8 percent. That's a pretty big increase given how low the rate was a year ago.

But if you have a high school degree, the unemployment rate was at 8 percent; less than a high school degree, 12 percent. So, still, it's a good thing to have more education than less in the labor market with respect to unemployment.

When we look at certain demographic groups, we saw the unemployment rate for African-Americans up significantly, as well as that for Latinos. And in this report, in this month's report, the Bureau of Labor Statistics reported for the first time unemployment rate for workers with disabilities, and that was up to over 13 percent.

So unemployment is distributed across all the different sectors of the economy, but there are certainly certain demographic groups that are experiencing a much harder time than others.

JEFFREY BROWN: And we're also, of course, hearing more about the strain that all this puts on unemployment benefits, that system, particularly as people are out of work for a longer period. What can you tell us about the system and its strength?

LISA LYNCH: Well, for states, as they're trying to manage their unemployment insurance funds, both the demands on the funds are obviously going up, with this kind of acceleration in the unemployment rate.

We saw claims -- initial unemployment claims this week up over 600,000, so a lot of people going to the unemployment insurance office to collect benefits, at the same time that employers are shutting down operations and laying off workers and not making contributions into those centers.

So the revenue into the trust funds for the unemployment insurance is decreasing at the same time that the draws on those funds have been increasing.

On top of that, employers that still are employing workers are now facing increases in the rates that they pay for the insurance fund, as unemployment rates increase in the states and states try to find new revenue to fund their unemployment insurance fund.

Looking for 'glimmers of hope'

Lisa Lynch
Brandeis University
There was certainly not much hope in today's report in terms of feeling confident somehow or other we've hit bottom and we're turning the corner.

JEFFREY BROWN: I'm sure a lot of people are wondering where we're at in the cycle. I know this is probably a tough question, but what does history tell us about, when you have months like this, when there are so many cuts, when it happens so fast, are there any clues about whether that says where we are in the cycle, when these kind of cuts happen?

LISA LYNCH: You know, I think a lot of us are looking desperately for glimmers of hope that we've hit bottom and we've turned around. But the employment report is probably not where you're going to see that first.

Employment is usually a lagging indicator of how the economy is doing. We'll most likely see first growth in the economy, or at least a significant slowdown in the contraction that we're going through in the economy, and maybe, three to six months after that, we'll see the unemployment rate peaking and then a turnaround on the labor market side.

But there was certainly not much hope in today's report in terms of feeling confident somehow or other we've hit bottom and we're turning the corner.

JEFFREY BROWN: All right. Well, Lisa Lynch of Brandeis University, thanks very much.

LISA LYNCH: Thank you, Jeff.