Hopeful signs seen in U.S. jobs report
The U.S. economy shed 20,000 jobs last month, the Labor Department said Friday in a report many economists took as powerful evidence that...
The New York Times
The U.S. economy shed 20,000 jobs last month, the Labor Department said Friday in a report many economists took as powerful evidence that the U.S. is ensnared in a recession.
It was the fourth consecutive month of decline. But the size of the loss was significantly smaller than many analysts had predicted, and the unemployment rate nudged down to 5 percent, sowing hopes that the economy may not suffer as severely as some have feared.
"The good news is, it strongly argues that this downturn will be mild and short-lived," said Mark Zandi, chief economist at Moody's Economy.com. "As long as businesses hold the line on their layoffs, the economy will weaken, but it won't unravel."
Still, as Zandi and other economists noted, beneath the headline number in the Labor Department report are clear signs of widening distress for millions of U.S. workers as the economy slows.
Companies are cutting working hours, even as many avoid layoffs. Those working part time because of slack business or out of failure to find full-time work swelled to 5.2 million in April from 4.9 million in March. In percentage terms, employees working part time involuntarily climbed to the highest level since 1995.
The average weekly pay for rank-and-file workers — about 80 percent of the American work force — fell $3.55 last month to $602.56 in inflation-adjusted terms. This figure has been generally falling since the end of 2006. Gains in pay have been canceled out by the soaring costs of food and energy.
"The punch line is that you don't have to lose your job to get pinched in a recession," said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington, D.C. "Understandably, we focus on layoffs and job losses, but most people keep their jobs in a recession. People who held their jobs are losing ground both in terms of hours and hourly wages."
The number of people on nonfarm payrolls was lower last month than it was six months earlier. Over the last half-century, every time employment has dipped in such a fashion, the economy has proved to be in a recession or emerging from one.
The unemployment rate does not capture people who have simply given up looking for work. These so-called discouraged workers swelled to 412,000 last month from 399,000 a year earlier.
The weak labor market is intensifying pressures on an economy still grappling with plummeting real-estate prices and tightening credit conditions as jittery banks hold on to their dollars.
As homeowners lose their ability to finance purchases by borrowing against the value of their homes, and as credit-card holders hit the wall on credit limits, the paycheck has returned as the primary source of purchasing power. And now paychecks are shrinking and disappearing.
"It's kind of tough when you've got to tell your family that a lot of things are going to change and the things we're used to are basically going to stop," said Howard Dempsey, an assembly worker at a Freightliner truck factory in Cleveland, N.C., who recently learned that he would lose the job he's held for a decade next month, along with 1,500 other people.
"It's hard to understand how all this happened so fast, when one day we're building 200 trucks a day and the next day we're down to 100."
Overall, the economy shed 46,000 manufacturing workers last month and has eliminated 326,000 such positions over the last year, the Labor Department reported.
Construction remained the center of contraction, losing 61,000 jobs. In an indication of the pullback in the economy as households tighten up, retailers eliminated 26,800 jobs.
Health care remained a rare bright spot, adding nearly 37,000 jobs. Restaurants and bars added 18,000 jobs.
The unexpectedly small number of job losses last month lent credence to a notion gaining currency that the recession most likely under way may be characterized by relatively few layoffs because hiring in recent years has been weak, leaving many companies lean.
"Companies are finding ways to cut their costs other than cutting lots of workers," said Ed McKelvey, a senior economist at Goldman Sachs.
Copyright © 2008 The Seattle Times Company
UPDATE - 09:46 AM
Exxon Mobil wins ruling in Alaska oil spill case
UPDATE - 09:32 AM
Bank stocks push indexes higher; oil prices dip
UPDATE - 08:04 AM
Ford CEO Mulally gets $56.5M in stock award
UPDATE - 07:54 AM
Underwater mortgages rise as home prices fall
NEW - 09:43 AM
Warner Bros. to offer movie rentals on Facebook