Unemployment: Worst rate in 26 years

  • Article by: DEE DEPASS , Star Tribune
  • Updated: November 6, 2009 - 9:34 PM

U.S. joblessness climbed into brutal double-digit territory last month, hitting 10.2 percent. Minnesota's rate is expected to rise, too.

For the first time since 1983, more than 10 percent of American workers are jobless.

The unemployment rate moved into double-digit territory in October, continuing a long upward move that began before the financial markets froze up a year ago. And it looks increasingly like the job market will be the last aspect of the economy to move out of recession.

Minnesota's jobless rate -- 7.3 percent in September -- is expected to worsen when the state reports its October number on Nov. 19.

"We would not be surprised at all to see the unemployment rate rise. In fact we are expecting it," said Kirsten Morell, spokeswoman for the Minnesota Department of Employment and Economic Development (DEED).

Nationwide, the number of jobless rose to 15.7 million in October, as nonfarm payroll jobs fell by 190,000, according to the Bureau of Labor Statistics. Job losses were heaviest in the manufacturing, construction and retail areas. The lone bright spots were an increase in temporary hiring, long considered a precursor to permanent jobs, and a revision to the numbers for August and September showing layoffs weren't as severe then as initially thought.

But the job reports remain a pessimist's smorgasbord. The jobless rate, 9.8 percent in September, was 10.2 percent for October. And it would be closer to 17.5 percent if certain groups were factored in, such as the estimated 2.4 million workers who became too discouraged to look for work anymore in the four weeks prior to the survey, or the 9.3 million working part-time because they can't find full-time work.

The estimated number of "discouraged" workers who no longer count in the survey jumped in October by 808,000 people.

People start looking again

In Minnesota, 24,700 people visited one of the state's 47 Workforce Centers last month seeking aid, a 38 percent increase from September. Net job gains previously seen in the state's construction, manufacturing and health care sectors appear to be flattening out, Morell said.

Any improvement in the economy is sure to temporarily drive the jobless number higher for a time, as some of those who have given up for now start looking again and their presence is reflected in the jobless surveys.

"As the economy enters recovery, we think that more people who have stopped looking for work may be hearing that and will get back out there again to search for work,'' Morell said. "So we expect the unemployment rate to go up before it comes back down in a more sustained way."

Heidi Shierholz, an economist with the Economic Policy Institute in Washington, D.C., warned that the U.S. economic recovery will probably see few jobs being created until the middle of 2010. The last two recessions were similarly jobless in their early months, and this one is no different, she said.

So far, "8.1 million jobs have been lost in this recession, 15.7 million workers are unemployed and more than one in three of them have been out of work for over six months," Shierholz said in summarizing the damage to the workforce.

The situation has been so dire for laid-off workers that the Senate this week passed a bill to extend federal emergency unemployment benefits for at least another 14 weeks. A House bill also looks to extend benefits soon.

Laurie Trach, a supervisor in the Bloomington Workforce Center, said she wishes things were slower there. "We actually have three full [résumé and job search] classes today... and all of our rooms are being used," she said.

"We have had a fair number of people coming back," Trach said. "We thought they had jobs, but now they are back. That happens sometimes."

On-again, off-again job search

Renee Quade knows the drill. She spent Friday morning once again on DEED's computers, scouring for job openings. Quade has been laid off twice since February and each time headed back to the workforce center to scout for new jobs.

Her most recent job as a bank data scanner in Eagan didn't last a month. "I was there only three weeks when they said they were overstaffed and they let me go," she said.

The on-again, off-again job searches are wearing her down, Quade said. "It's very hard. It's very difficult."

Economist Joshua Shapiro of MFR Inc. transferred Quade's difficulties to the national scale. "The bottom line is that although labor market deterioration is clearly not occurring at the pace suffered late in 2008 and early this year, conditions remain brutal," he said.

Dee DePass • 612-673-7725

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