Five Year High in Monthly Job Loss

The Department of Labor’s Bureau of Labor Statistics (BLS) released its Employment Situation Summary Report for September that details a decline in non-farm payroll employment by 159,000 last month, the largest monthly slide in five years. Overall the unemployment rate last month was 6.1 percent. The downturn continues to impact various industries differently. Last month employment in manufacturing fell by 51,000, bringing the total loss to 442,000 over the last 12 months. One of the largest sectors shedding jobs within the industry was in automobile and parts manufacturers. The latter has lost 140,000 jobs over the last 12 months as sales of automobiles has come to a crawl over rising oil prices and foreign manufacturers. Construction also lost 35,000 jobs in September with the majority of the decline in residential construction. Retail also took a hit last month, shedding 40,000 jobs. The BLS data shows that Black unemployment rose to 11.4 percent last month while White unemployment was 5.4 percent. The rate for Black men 20 years and older was 11.9 percent compared to White men at 5.3 percent. The numbers in the BLS report are no better when focused on women. Last month the unemployment rate for Black women 20 years and older was 9.3 percent and for White women it stood at 4.2 percent. The gap between Black and White unemployment is consistent with trends that have been evident in the labor market for some time. The impact of the downturn is even more pronounced among teenagers, age 16 to 19 years old. The explosion of the “disconnected youth” population across the country has prompted the recent introduction of two bills in Congress. Rep. Charles Rangel (D-NY), Chairman of the House Committee on Ways and Means, has introduced H.R. 7066, a bill to create a federal tax credit under the Work Opportunity Tax Credit (WOTC) that would provide an incentive for employers to hire disconnected young adults. His New York counterpart, Rep. Jerrold Nadler (D-NY) introduced H.R. 7053, a bill that calls for the creation of a Transportation Jobs Corp that would assign jobs for disconnected youth to mass transit infrastructure projects. Both bills are expected to be taken up in earnest when Congress convenes next January for its 111th session. Without even a cursory glance at the BLS statistics it was understood that September would be a tough month for the financial services sector as many firms were gasping for air. The flurry of acquisitions in the sector represented a major shift in the scope and business model for many firms. Employment in the sector fell by 17,000 jobs, with almost half of the decline in securities and investment firms. As the economy trended downward, employment in professional and business services pared down by 27,000 in September. Two sectors that showed an increase in employment last month were health care employment (17,000) and mining (8,000), with job growth in the former averaging 30,000 a month over the prior year. The BLS reports that 1.6 million people were marginally attached to the labor force in September, an increase of 336,000 than 12 months earlier. These are people who wanted to work and were available to work, and had looked for a job during the prior 12 months. They are not counted as unemployed because they had not actively searched for work in the four weeks prior to win BLS issued the survey. Among the total of individuals marginally attached, there were 467,000 people characterized as “discouraged” last month. These are individuals not currently seeking work because they believe there are no jobs available for them. The number of workers in this category increased by 191,000 over the prior year. The other 1 million people marginally attached to the labor force had not searched for work due to school, family responsibilities of some other reason. The Bureau of Labor Statistics will release its Employment Situation Summary for October 2008 on Friday, November 7 at 8:30 a.m. (EST).