The labor market plunge continues. Employers shed 651,000 jobs in February—the largest one-month fall in employment since 1949—and total job losses have reached 4.4 million since the recession began in December 2007. More than half of these losses—2.6 million—occurred just since October after the trickle of jobs loss turned into a torrent.
The unemployment rate shot up to 8.1 percent in February, from 7.6 percent in January. There are 5 million more people unemployed compared to a year ago as the labor-market both loses jobs and fails to employ new entrants. This is the largest annual jump in the number of unemployed since the U.S. Bureau of Labor Statistics began tabulating this data just after World War II. Most of the unemployed—62.3 percent—are out of work because they lost their job, higher than any point since 1982.
Employers are not only laying off workers; they are cutting hours as well. The average work week remains at 33.3 hours per week—the lowest since 1964—when the BLS began tabulating this data. Approximately, 8.6 million workers report working less than full-time due to slack business conditions or because they could only find part-time work. Such workers are at the greatest risk of losing health benefits as they may no longer qualify for their employer’s plan, but may also not qualify for Medicaid.
Lay-offs were again widespread in February. Half of the job losses—50.3 percent—since the recession began in December 2007 have occurred in construction and manufacturing: 904,000 construction jobs and 1.3 million manufacturing jobs have disappeared over the course of this recession. As of January, men accounted for 78.5 percent of the jobs lost in these two industries, and 78.0 percent of the jobs lost overall. As a result, the share of adult men with a job is at an all-time low 68.9 percent.
Employers shed workers in all service industries except for health care. Retail trade lost 39,500 jobs last month, for a total of 608,000 since the recession began. Financial activities lost 44,000 jobs last month and 329,000 jobs since December 2007. The bright spots in the employment report continue to be health care and government, which added 27,000 and 9,000 jobs last month, respectively.
The monthly employment report will not likely show for many months how successful the American Recovery and Reinvestment Act is at getting the economy back at track. Some of the first signs of progress are likely to be that state and local governments keep people on their payrolls, which is consistent with today’s report. States and localities facing budget crunches will be able to tap into federal funds to avoid layoffs. The Act will also lead to employment in construction in future months, which will show up in either fewer jobs lost or job gains.
Today’s report shows little or no signs that firms intend to hire any time soon. The temporary help industry is usually a harbinger of things to come in the labor market: when employers begin to need workers but aren’t quite ready to hire, they will add on temporary workers. Last month, the temporary help industry lost 77,700 jobs for a total of 686,000 since the beginning of recession.
The number of unemployed workers continues to far outpace the number of job openings. There were 11.1 million unemployed workers at of the end of 2008, yet only 2.7 million job openings were available. That equals more than four unemployed workers for every job opening. Workers are lining up around the country—even in 20-degree weather—to apply for jobs. A job fair in New York City, which had never had more than 2,000 attendees, registered 5,103 job applicants last week. Nearly 800 people in Columbus, GA, lined up to fill about 150 positions for a new restaurant opening at the National Infantry Museum and Soldier Center at Patriot Park.
Workers are staying unemployed for long periods. The typical unemployed worker in February had been out of work and searching for a new job for 19.8 weeks, and 23.1 percent of the unemployed had been out of a job for at least six months.
Millions are simply giving up on finding a new job. There are 5.6 million workers who report being out of the labor force but wanting to have a job, of whom 713,000 left because they were so discouraged with their job search—double the number a year ago. What’s more, 2.2 million workers reported moving from unemployment to out of the labor force between January and February of this year.
Workers of color have been extremely hard hit by unemployment. The unemployment rate for African American workers is 13.4 percent, up from 8.4 percent a year ago. Hispanic workers’ unemployment was 10.9 percent last month, up from 6.3 percent a year ago. The unemployment rate for white workers was 7.3 percent in February, up from 4.4 percent a year ago.
The number of workers receiving unemployment benefits continues to mount. In the week ending February 28, the four-week moving average for applications was 641,750—the highest since 1982. The week ending in February 21 the four-week moving average for continuing benefits was 5,011,000—just below the record set last week—and above the previous all time peak of 4.71 million in 1982. Yet, nationwide, even after Congress extended benefits to the long-term unemployed, only 50 percent of unemployed workers received unemployment benefits last quarter, including those on extended benefits.
The loss of a job means not only lost earnings for millions of workers and their families, but also the loss of the family’s health insurance. Recent research roughly estimates that 14,000 people became uninsured every day in December 2008 and January 2009.
One bright spot in today’s otherwise grim employment report is that nominal wages grew at an annualized rate of 3.5 percent last quarter. The Consumer Price Index for Urban Wage Earners and Clerical Workers fell by 0.5 percent from January 2008 to January 2009, so workers are taking home more in inflation-adjusted terms compared to a year ago. But with hours dropping and jobs being loss, this isn’t much of a silver lining, and it is unlikely to persist.