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27 million Americans without full-time work, real unemployment tops 17.5%
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Friday's unemployment report offered no comfort to economists, government officials and the 27.4 million Americans now unable to find full-time employment. In recent months unemployment numbers have produced growing economic concerns over the likelihood of an economic recovery that fails to produce job growth; and this month's unemployment report, coupled with recent GDP estimates point support those concerns. Despite billions of dollars in stimulus spending that continues to flow out of Washington, the Department of Labor report pointed to job loss numbers that have failed to improve amid the spending.
The Department of Labor reported a rise in the adjusted non-farm unemployment rate to a new high of 10.2% after the economy shed another 190,000. However, the Department of Labor also reports that the number of unemployed Americans increased by 558,000 last month, representing a sharpest increase in unemployment since this spring. In addition, beyond the adjusted payroll number lies a host of employment numbers including the disturbing reality that 27.4 million Americans are now unable to find full-time employment.
As we have pointed out in previous reports, the adjusted payroll numbers do not include 2 groups of unemployed workers that the DOL refers to as temporary part-time workers and marginally attached workers. The DOL reported that 9.3 million Americans are currently working part-time due to economic conditions, an increase of 100,000 workers during October. This group is comprised of workers who have had their hours cut from full-time status or who have been able to find full-time employment. In addition the DOL reported that the number of marginally attached workers stands at 2.4 million. Such marginally attached workers include individuals who are unemployed but have not sought work over the 4 weeks prior to the survey and includes some 768,000 "discouraged' workers that have simply given up. The number of "discouraged" workers increased by more than 50,000 last month. The addition of such excluded groups caused the real unemployment rate to increase from 17.0% to 17.5%, out-pacing the growth rate within adjusted employment figures.
Inside the Numbers
The DOL report confirms an ongoing pattern that has developed in which the real unemployment rate continues to rise at a faster pace than the adjusted unemployment rate. Such a pattern indicates that not only do more Americans continue to lose jobs, but also that the jobless are remaining unemployed for a longer period of time. The lengthening period of unemployment is reflected by DOL statistics indicating that 35.6% of U.S. jobless have remained unemployed for longer than 6 months. The number of chronically unemployed has consistently increased in the past 6 months. Such a high number of chronically unemployed represents the first time since the 1970's that this condition has existed.
The manufacturing and construction sectors continued to shed more jobs in September demonstrating a eerily consistent pattern of job loss that has persisted throughout the 2nd and 3rd quarter. The continued weakness within manufacturing and construction employment was largely unexpected considering the increase in stimulus funding within the industries.
The construction industry shed more than 62,000 jobs in October, falling in-line with an average monthly job loss of 67,000 jobs/month since May. The lack of growth in job creation within the construction industry highlights the failure of stimulus funding aimed directly at creating construction-related jobs. In addition, the manufacturing sector reported 61,000 job cuts in October, an increase of 10,000 jobs over the 51,000 job losses suffered in September.
Following ongoing trends, the health care industry added an additional 29,000 jobs last month. Since the onset of the recession the industry has added 597,000 jobs. However, hiring within the health-care sector has slowed dramatically since May.
Government related job losses stabilized in October as public sector employment remained unchanged. However, the retail sector shed another 40,000 jobs last month, unchanged from the previous month. The continued loss of jobs within retail trade continues to concern economists, considering continued announcements of planned store closings by companies such as borders. Analysts now fear that the traditional uptick in hiring that occurs from October to December may bypass the retail industry this year.
According to the Department of Labor, 15.7 million Americans are now unemployed. 9.3 million Americans are unable to find full-time employment and 2.4 million Americans have simply given up. As a result, 27.4 million Americans are now unable to find full-time employment.
As pointed out at the end September, the jobless rate is not increasing as rapidly as it was during the first half of the year. However, employers cut deep and hard during the first quarter of the year and economists had expected employment figures to improve throughout the Fall. The Economic Recovery Act promised a increased infrastructure spending and subsequent job creation. A majority of politicians supporting the stimulus package labeled the bill as a "jobs bill". Yet, the lack of targeted stimulus has produced typical unemployment patterns a failure that is highlighted by the reality that the stimulus package was nearly five times larger than any stimulus package in history.
Historically, the periods July to August and November to December have provided the strongest levels of employment in the US. July and August numbers are traditionally strong due the height of US construction levels and increased manufacturing in preparation of an upcoming holiday season. A consistent job loss within these industries during the past 6 months raises the likelihood that sustained job creation within these industries will not occur until next summer. As a result, we are likely to see the adjusted unemployment rate remain stable through the end of the year. Economists also warn that if consumer spending does not recover prior the holiday season, then we are once again likely to see a drastic increase in January and February unemployment data and an adjusted unemployment rate approaching 11.0% by Spring. Subsequently, the real unemployment rate is likely to approach 18%-19% during the same period.
The unprecedented size of the stimulus package has provided a life line to the economy as the rate of government spending has eclipsed all previous records. However, that life line is not enough to save jobs as the stimulus has failed to provide relief to consumers, increase consumer spending or provided targeted relief to the private sector. Roughly 70% of our economy is driven by consumer spending and with a stimulus plan that failed to provide relief to consumers, a slow recovery in consumer spending will mean an inherent lack of job creation. Economists further warn that a continuous expansion of government, while failing to provide expansion of the private sector, has created an environment in which a double-dip recession is increasingly likely. A vast majority of economists now agree that the current stimulative policies of current administration will lead to a period of slow economic growth and unacceptably high unemployment over the next decade. As of the end of October, more than 1 in every 6 Americans were unable to find full-time employment.
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