Diminishing pay, fewer jobs threaten economic recovery / LJWorld.com

Archive for Friday, July 3, 2009

By Jeannine Aversa - Associated Press Writer

July 3, 2009

Mark Lennihan/AP Photo

Janet Francis looks at job postings at the New York State Department of Labor on Thursday in Brooklyn. In June, employers cut a larger-than-expected 467,000 jobs, and the unemployment rate climbed to a 26-year high of 9.5 percent. Decreasing wages and hours for many who are still employed also present a serious concern. Francis, 36, of Brooklyn, has been unemployed for two years and has used the time to work toward her college degree in social work.

Washington — Americans lucky enough to still have a job are noticing something unpleasant in their paychecks: They’re making less money.

Employers cut 467,000 jobs in June, far more than expected, and the jobless rate hit a 26-year high of 9.5 percent. Just as worrisome, wages shrank to their lowest in nearly a year.

The bleak news Thursday from the Labor Department underscored one of the big threats to an economic turnaround: Rising joblessness and falling wages for those still working could send Americans back into spending hibernation and short-circuit any recovery.

President Barack Obama showed concern. “What we’re still seeing is too many jobs lost, too many families who are worried about whether they’re going to be next in terms of job loss, or whether they can find another.”.

The falling wages come from furloughs, pay freezes and pay cuts imposed by employers across the country. Many also have cut hours: The average work week in June fell to 33 hours, the lowest on records dating to 1964.

Nathan Bieber, 26, who works at Einstein Bros. Bagels in Phoenix, works 28 to 30 hours a week now, down from his previous 37 — a loss of up to $100 weekly. He’s canceled his Internet service and deferred payments on student loans six times.

His wife, who is legally blind and works at another Einstein Bros., has had her hours slashed from 30 to 15. They rely on her disability pay for rent and the electric bill.

“If it weren’t for that,” he said, “we’d be homeless.”

The bleak jobs news sent stocks sinking. All the major stock indexes finished down more than 2.5 percent, including a 223-point drop for the Dow Jones industrials, its worst performance in more than two months.

Job losses decreased every month since January, but they rose in June. The 467,000 job losses were up from 322,000 in May and far worse than the expected 363,000.

By comparison, the unemployment rate’s rise in June was small, up just a tenth of a percentage point to 9.5 percent. Many economists predict it will hit 10 percent this year and keep rising into next year before falling back.

The recession has taken out 6.5 million jobs in about a year and a half. All told, nearly 15 million people were considered unemployed in June.

“Whatever is available, you kind of have to take it,” said Shirley Walker, 58, who lost her job running a nonprofit in Orlando, Fla.

Illustrating how hard it is to land a job, 29 percent of the unemployed have been out of work six months or longer. That’s the most since just after World War II.

Average weekly earnings fell about $2 in June to $611.49, the lowest in nearly a year.

The strength of any economic recovery will depend heavily on Americans’ willingness to borrow and spend.

“The job market will become the Achilles’ heel of the coming recovery,” said Sung Won Sohn, an economist at California State University, Channel Island.

Discussion

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3 July 2009
at 6:15 a.m.

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jmadison (Anonymous) says…

It appears that the stimulus bill that had to be passed post haste last February, sight unseen and unread by our legislators, is producing squat in terms of a recovery.
3 July 2009
at 11 a.m.

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Moderate (George Lippencott) says…

Surprise! We have run up a massive federal debt since January. We are considering initiatives that will cost the government and the rest of us a bundle. There appear to be more such initiatives in the hopper. That creates a great deal of uncertainty as to taxes to pay for all of this. It undermines confidence in the future.
Why would any business try to expand or any individual take on more debt? Responsible people will most likely shrink there commercial activities in the face of uncertainty. That means more layoffs and sluggish consumer buying. Maybe it is time to slow down, clarify where we are going and establish who will pay for what we are doing. That might start to restore confidence and maybe lead to a recovery. Otherwise I think we will see more of the same. Be careful what you wish for you just may get it!
3 July 2009
at 1:55 p.m.

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oneeye_wilbur (Anonymous) says…

watch the unemployment lines in late fall and early winter increase except for Lawrence which will have fees tacked onto the water bills to create construction jobs for sidewalks for the local cronies, so they are not in the unemployed line
3 July 2009
at 2:03 p.m.

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beobachter (Anonymous) says…

The Republicans are no longer in charge, things can only get better. Are all Republicans required to be pessimists and whiners? They got their butts kicked in last 2 elections and still don't understand why.