By Dean Baker
“The unemployment rate is likely to cross 7.0 percent early in 2009.”
The economy lost jobs for the ninth consecutive month in September, with the pace accelerating to 159,000 jobs. This was the largest one-month fall since March of 2003 when the economy lost 212,000 jobs. The unemployment rate held steady at 6.1 percent, even though the employment population ratio (EPOP) inched down to 62.0 percent. These data, together with other recent reports, leave little doubt that the economy is in a recession.
Virtually all the news in the household survey was negative. The EPOP fell to 62.0 percent which is equal to the low point from the last downturn reached in September of 2003. Unemployment for men rose by 0.5 percentage points to 6.1 percent. The unemployment rate for black men jumped 1.6 percentage points to 11.9 percent, the highest rate since February of 1994.
By education level, the least educated workers are feeling the worst effects of the recession. Unemployment among workers without high school degrees is at 9.6 percent, more than 2.5 percentage points above the lows hit in 2007. Unemployment for high school graduates is 6.3 percent, more than 2.0 percentage points above the lows hit last year.
The number of workers involuntarily working part-time jumped by another 300,000 in September and now stands more than 2 million above its low point in 2006. The U-6 index, which is a broad measure of labor market slack including underemployed and discouraged workers, hit 11.0 percent, the highest level since April of 1994.
One noteworthy item in this report is that the EPOP for white women exceeded the EPOP for black women for the first time ever, 57.8 percent compared to 57.7 percent. Historically black women have always had considerably higher labor force participation rates, since fewer could afford not to work. While the participation rates of black women are still higher than for white women (63.6 percent compared to 60.3 percent), because the unemployment rate for black women is much higher (9.3 percent versus 4.2 percent), white women now enjoy a slightly higher EPOP.
The establishment survey shows an equally bleak picture. The private sector lost 168,000 jobs in September. The Bureau of Labor Statistics also released preliminary benchmark revisions to the survey, which show that between March of 2007 and March 2008, there were 81,000 fewer private sector jobs than originally reported. Including this revision, the economy has created just 3,061,000 private sector jobs since President Bush took office. By comparison, it created 2,600,000 jobs annually during the Clinton administration.
Job loss was sharpest in manufacturing, where employment fell by 51,000 in September, and is now down by 442,000 from its year ago level. Since its peak in March of 1998, manufacturing has shed 4,257,000 jobs, losing 24.1 percent of employment in the sector. The auto sector has been especially hard hit. It has lost 140,000 jobs over the last year and 441,000 jobs since peaking in February of 2000. This drop is equal to 36.2 percent of employment in the industry.
Construction lost 35,000 jobs in September, while retail trade lost 40,100. Car dealers accounted for 8,600 of these jobs. Trucking shed 12,300 jobs, pushing employment down by 4.6 percent from year ago levels. Financial services lost 17,000 jobs and employment services shed 28,900. Employment growth in health care and state and local government, the two main sources of strength in recent months, has also faded. These sectors added 16,600 and 2,900 jobs, respectively.
The report also shows hours dropping, consistent with the growth in part-time employment reported in the household survey. The index of aggregate weekly hours fell by 0.5 percent last month and is now down by 1.3 percent from its year ago level. Wages grew at a 3.3 percent annual rate over the last quarter, almost the same as the 3.4 percent rate over the last year.
This report should remove any lingering doubts that the economy is in a recession. The rate of job loss is accelerating and the unemployment rate is virtually certain to cross 7.0 percent early in 2009.
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