Joblessness worst since Depression

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Joblessness worst since Depression

In October, 17.5% out of work or underemployed

By DAVID LEONHARDT

NEW YORK TIMES

Nov. 6, 2009, 11:11PM

For all the pain caused by the Great Recession, the job market still was not in as bad shape as it had been during the depths of the early 1980s recession — until now.

With the release of the jobs report on Friday, the broadest measure of unemployment and underemployment tracked by the Labor Department has reached its highest level since at least 1970. If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.

In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous high was 17.1 percent, in December 1982.

This includes the officially unemployed, who have looked for work in the last four weeks. It also includes discouraged workers, who have looked in the past year, as well as part-time workers who want to be working full-time.

The official jobless rate — 10.2 percent in October, up from 9.8 percent in September — remains lower than the early 1980s peak of 10.8 percent. But that rate excludes millions of people who have given up looking for work and part-time workers who want to be working full time.

The rate is highest today, at 20 percent, in states that had housing bubbles, like California and Arizona, or that have big manufacturing sectors, like Michigan, Ohio, Oregon, Rhode Island and South Carolina.

Most economists predict that the rate will in fact begin to fall next year, largely because of the federal government's aggressive response — fiscal stimulus, interest-rate cuts and a variety of creative steps by the Federal Reserve and Treasury Department.

Friday's report showed that monthly job losses continued to slow recently.

At the White House on Friday, President Barack Obama signed a bill to extend unemployment benefits and a tax credit for home buyers, and said that he was looking at ways to enact more stimulus.

On Wall Street, investors added to the week's strong gains in the stock market after finding some positives in a surprisingly weak jobs report. Stock indexes posted a modest advance .

The rise in joblessness, while not welcome news for the economy, reassured some investors that the Federal Reserve will have to hold interest rates low for some time. That tends to weaken demand for the dollar, which in turn gives a boost to stocks.

Nearly 16 million people are now unemployed, and more than 7 million jobs have been lost since late 2007.

Officially, the Labor Department's broad measure of unemployment goes back only to 1994. The New York Times created a version that estimates it back to 1970. If such a measure were available for the Depression, it would have exceeded 30 percent.

Compared with the 1980s, a smaller share of workers today are officially unemployed, and a smaller share are discouraged workers.

But there are many more people who would like to be working full time and have been able to find only part-time work, the government's monthly survey says. The rapid increase in their ranks and in the officially unemployed has caused the rate to rise faster in this recession than in the early 1980s. Two years ago, it was 8.2 percent.

One of the more striking aspects of the Great Recession is that most of its impact has fallen on a narrow group.

First, the number of people who have experienced unemployment is low, given the severity of the recession. The pace of layoffs has increased, but the peak layoff rate this year was the same as it was during the 2001 recession, which was fairly mild. The reason that the unemployment rate has soared is the hiring rate has plummeted.

Second, wages have continued to rise for most people who still have jobs. It is a strange combination: Workers who still have a job are doing better than in other recessions, but the unemployment and underemployment have risen to their highest level since the Depression.

http://www.chron.com/disp/story.mpl/business/6708328.html