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June Swoon: 125,000 Jobs Lost in June

Weak Employment Report Adds to Fears of “Double-Dip” Recession
By Masao Suzuki |
July 4, 2010
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San José, CA - On Friday, July 2, the U.S. Department of Labor reported that 125,000 jobs were lost in June. While the official unemployment rate fell from 9.7% in May to 9.5% in June, this was due to the 650,000 people that gave up looking for work and were no longer counted as unemployed. These signs of weakness in the labor market followed reports that housing and car sales were also weak in June. Altogether these reports increase the danger that the economy could slide back into a “double-dip” recession.

The large job loss in June was mainly due to the Census Bureau cutting 225,000 temporary jobs. This was partially offset by private businesses creating 83,000 new jobs. This is a very weak rebound compared with past recessions. Following the deep 1981-1982 recession, businesses created an average of more than 200,000 new jobs per month for the first six months of 1983. It took only ten months for the jobs lost during the recession to come back once businesses started hiring again. In contrast, businesses have added less than 100,000 new jobs each month this year. At this rate, with almost eight million jobs lost because of the recession, it will take eight years to gain back the lost jobs.

The unemployment gap between whites on one hand, and African Americans and Latinos on the the other, widened in June as compared to May. The official unemployment rate for African Americans was 6.8% higher than whites, at 15.4%, and the rate for Latinos was 3.8% higher, at 12.4%.

While the official unemployment rate fell from 9.7% in May to 9.5% in June because fewer people were looking for work, if these people were counted as unemployed, the unemployment rate would have actually increased to 9.9%. The drop in what economists call the “labor force participation rate” meant that last month there were about three million fewer people in the labor force than if the labor force participation rate were the same as the expansion years of 2002-2007. The number of jobless workers who said that they wanted to work but didn’t look in June (marginally attached and discouraged workers) rose by more than 10% from the month before. A broader measure of unemployed, jobless who stopped looking for work, and part-time workers who can’t find full time work stood at 16.5% in June, or one of every six workers.

Other signs of a weak labor market were that weekly hours of work fell, showing that employers were cutting back on the work week. The typical unemployed worker was out of work two weeks longer in June (25.5 weeks) than in May (23.2 weeks). In addition, the Labor Department reported on July 1 that the four week average of new claims for state unemployment insurance benefits rose to 466,500, the highest level since March.

Economic weakness was not just in the jobs report. The National Association of Realtors reported on July 1 that pending sales of existing homes fell by 30% in May, following the end of the Federal home buyers tax credit. This indicates that home sales would be much weaker in June. The June jobs report also reflected the weak housing market as construction jobs fell by 22,000. Car sales were also off in June. Total car sales of both U.S. and foreign-owned car companies fell 4.5% to 11.2 million, from 11.6 million (at an annual rate) in May.

Republicans are leading the charge to end programs to counteract the effects of the recession. They have argued that unemployment insurance keeps people from taking jobs. But last month when Republicans in the Senate blocked funding and cut more than a million people from the Federal Extended Benefits (EB) and Emergency Unemployment Compensation (EUC) programs, more people stopped looking for work. Republicans have also blocked funding for the COBRA program to help the unemployed keep their medical insurance, and funding for states to pay for medical care for the poor. This will lead to even more home foreclosures, more people without health insurance, and greater cuts in state spending.

State and local governments and schools cut almost 10,000 jobs in June, reflecting their on-going budget woes. Over the last year, state and local governments and schools have cut almost 200,000 jobs. In contrast, between 2002 and 2007, state and local governments added over 150,000 jobs a year. Job cuts are likely to increase when Federal stimulus moneys designed to help state and local governments run out at the end of the year. Not only are jobs being lost, but state and local government workers and teachers are facing cuts in pay, benefits, and hours worked, leading to cuts in government services and education when they are needed the most.

A growing worry is that this wave of belt-tightening at the local, state, and Federal governments, along with similar efforts in Europe and Japan, will throw the economy back into a decline, or what is known as a “double-dip” recession. This happened during the Great Depression, when efforts to cut the Federal budget deficit led to a sharp recession in 1937-1938, causing the unemployment rate to rise from 14.3% to 19%.

1 comment

 
VINCENT COMELLO wrote 4 years 12 weeks ago

SHAME ON BOTH REPUBLICANS AND THE UNCARING EMPLOYED

Shame on the uncaring republicans and the uncaring employed
Hey folks first wanted to say Happy 4th, of course like myself and millions of other AMERICANS there isn't really anything to celebrate. I wanted to discuss 2 points here so here's the first..

Shame on all the republicans, and the 1 Democrat who voted no on extending unemployment. I was in Tier 1 when it got cut off, but yet you seem to have no problem giving another 50 Billion to fund a war we don't belong in. Shame on you for continuing to side with big buisness and outsourcing billions of jobs just so you can fatten your wallet. Shame on you for sending billions upon billions to other countries to help them, BUT THE AVERAGE EVERYDAY AMERICAN CAN JUST DIE OFF DUE TO YOUR INABILITY TO DO ANYTHING RIGHT. Shame on you for leaving for your lovely week vacation, which I know in the 23 yrs I have been working I never got a entire week off for the 4th, let alone any holiday for that long. I know people like you don't care at all for the American people, even when you do get your "pink slip" come Novemeber you get a whole retirement package and your health insurance is completely covered. Thats ridiculous, I would like to know of any employer that continues to cover all your health insurance 100 percent, and a nice retirement package after you get fired?? Oh, don't forget us "nuts" will remember this come November! I have already, and will continue to talk to all my relatives, including a die hard republican mother, and will do everything in my power to make sure they don't vote for any republican come November. If 2 MILLION "NUTS" AS U CALL US ALL VOTE ANYTHING BUT REPUBLICAN AND GET OUR FAMILIES TO AS WELL GEE YOUR TALKING MILLIONS UPON MILLIONS OF VOTES TO ANY1 BUT A REPUBLICAN.

On a final note for the criminals in office, I had a thought yesterday. Can you imagine how much of a hero that 1 republican could have been if at the last moment they voted in favor of saving the lives of millions just before our Independance day? As usual though they don't care.

Shame on the uncaring employed who seem to enjoy stabbing a fellow American in the back, I don't hardly see any of you complaining about the billions that get sent overseas, or the billions of jobs lost due to our criminal government putting billions into their pockets and placing the interest of big buisness before Americans. If 2 million Aericans were dying, would you still sit here and say oh well? Well by your actions thats what you are doing. Maybe when your job gets outsourced for cheaper wages maybe then you won't be as cold hearted as you are now. As far as trying to get a fast food job, yea I have even tried that with no success. When you lose your job don't apply for unemployment since all you have said that the unemployed are lazy. Wake up people before it's too late, start caring for your fellow American. After 9/11 we were all unified, that was a horrible tragedy, and so is this.