Main Street

Unemployment Over 10%

This is a landmark we knew we’d be hitting, but really didn’t want to.

Unemployment worsened in October to 10.2 percent, a huge jump from 9.8 percent in September. That’s 15.7 million jobless workers, according to the U.S. Bureau of Labor Statistics.

Worse, the unemployment and underemployment rate is a shocking 17.5 percent—more than 27 million American workers without full-time jobs.

The construction, manufacturing and retail industries had the biggest losses, with 62,000 construction jobs lost in October, 61,000 in manufacturing and 40,000 in retail. Health care and temporary employment were the only bright spots, with health care jobs increasing by 29,000 and temp jobs by 44,000.

Meteor Blades at Daily Kos writes:

The disconnect between a quarter-century ago and what American working stiffs now face is readily apparent. Ignoring for the moment all those long-standing issues underlying this and other recent U.S. economic crises – stagnant wages, off-shored jobs, a tax code favoring upward transfers of wealth, corporate concentration, and profound conflicts of interest by high government officials, to name a few – today’s counterparts of the consumers who drove previous recoveries live in a different world.

They are heavily indebted and 5.6 million of them have already been out of work longer than the duration of the entire 1981-82 recession. Good news in productivity improvements, vastly reduced layoffs, unexpected improvements in automobile sales and the first GDP expansion in four quarters are tempered by the fact we’re moving upward off very low bottoms, and by bad news like increased bankruptcies, dramatic increases in foreclosures in previously stable cities, and the coming tsunami of lay-offs caused by state budget crashes. Moreover, that touted engine of job growth, small businesses, are having a devil of a time getting the loans they need from the banks the taxpayers bailed out.

Sometime, most likely late in the first quarter of 2010, but possibly sooner, net positive job growth will return. But without further government stimulus – a most difficult sell in Congress these days – the speed with which we get back to where we were two years ago is likely to be torpid. The disconnect between the GDP recovery and the job recovery could expand even more.

Yesterday’s vote by the House to extend unemployment benefits—a bill that President Obama is signing today—is a small bright spot.

Economists generally support extending unemployment insurance. The bill would prolong benefits for at least 14 weeks for people out of work. The jobless in more than two dozen states where unemployment rates exceed 8.5 percent would receive to 20 additional weeks of benefits.

Because unemployed people tend to be strapped for cash, they often spend most if not all of the money they receive as benefits. This in turn tends to give a bigger boost to the wider economy than do many other forms of government spending.

“It’s hard to think of any other initiative we can name that is as beneficial to job creation,” House Speaker Nancy Pelosi (D-Calif.) said of the unemployment-benefits provision. “Its original purpose is fairness to those workers who have paid into the insurance system, and now they are getting insurance benefits, but it also has an impact as a stimulant.”

As we’ve written before, without this extension, unemployment benefits would have for more than a million people. Getting help for them—and money into the economy—is a good thing. But it would be better if the government would take further action to decisively lessen unemployment.

Tags: unemployment, unemployment extension