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Tidal Wave of Layoffs Continues in December

2.5 Million Jobs Lost in 2008, the Most Since 1945
by Adam Price |
January 10, 2009
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San José, CA - On Friday, Jan. 9, the Department of Labor reported that 524,000 jobs were lost in December. With even more jobs losses in November than estimated last month, 2008 was the worst year for jobs since 1945, with more than 2.5 million jobs lost. The official unemployment rate rose by one-half of one percent, to 7.2% from 6.7% in November. This is the highest unemployment rate since 1992. The measure of underemployment, which includes people working part-time because full-time jobs are not available and workers who gave up looking for work or didn’t look last month, rose by almost a full percentage point to 13.5%. With more and more part-time workers, the average number of hours worked in a week fell to the lowest level since records began in 1964.

African Americans and Latinos were hardest hit by rising unemployment in December, with those rates rising 0.6% each, to 11.9 and 9.2%. This is compared to a 0.4% rise for whites, to 6.6%. Many unemployed Latinos who are undocumented cannot get unemployment insurance benefits, even if they were paying taxes (which about three-quarters are). With unemployment rates averaging 50% higher than that of whites, oppressed nationality communities are on entering depression-level, or double-digit rates of unemployment.

Not only are layoffs rising, but unemployed workers are having a harder and harder time finding new jobs. The number of workers who have been without jobs for more than six months rose to 2.6 million in December, twice the level of a year before. It is no wonder that unemployment benefits rolls continued to rise, with 4.6 million people receiving benefits, the most since 1982. The wave of layoffs swamped online unemployment insurance sites in New York, North Carolina and Ohio causing them to crash. Two states, Michigan and Indiana, have already run out of funds to pay benefits and are borrowing from the federal government to pay their unemployment insurance. Thirty more states could run out of money to pay their benefits within a few months.

The rising tide of joblessness is causing retail sales to fall for three months in a row, leading stores to lay off more workers or even shut down entirely, as in the cases of Linens ’n Things and Sharper Image. Even more retailers are expected to declare bankruptcy this year, leading to even more layoffs, store closings and liquidations. Rising unemployment is also contributing to still rising problems with home mortgages, with one out of ten home-buyers now late on their payments or in foreclosure. The increase in foreclosures is driving down home prices, now 23% below their peak in July of 2006 and the lower home prices make it more difficult to refinance.

While congress has extended unemployment benefits, which normally run out in six months, only a little more than 40% of the unemployed are collecting benefits. The incoming Obama administration has said it would work to expand eligibility, which has become more and more restrictive over the last 30 years. But at the same time, president-elect Obama is asking for a tax credit for creating new jobs. This ‘trickle-down’ approach is bound to fail, since businesses are not going to create more jobs if they can’t sell their product, or will reap a tax break for hiring that they would have done anyway. Just look at what the Bush administration’s TARP program; it injected more than $300 billion of government money into banks, while the banks are sitting on $800 billion in ‘excess reserves’ or cash that they could loan out, but aren’t.

With large companies announcing tens of thousands of new layoffs just in the first week of January, unemployment is bound to rise and may go as high as 10% this year. The Obama plan to spend $200 - 300 billion dollars on construction projects this year is a start, but may not help many African Americans and women who are underrepresented in construction work. What is really needed is a government jobs program like the Depression-era Works Progress Administration (WPA), which employed more than 3 million people at its height in 1933 (equal to almost 10 million people today).

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