New Unemployment Numbers 'Devastating' but Not Debilitating
"Expert" economists predicted that at least 140,000 new jobs would be created in November and that the unemployment rate would hang tight at 9.6 percent (if not be reduced a fraction). So it felt like a punch in the stomach to the American work force when the Department of Labor's monthly report stated that only 39,000 jobs had been added and that unemployment has climbed to 9.8 percent.
"The numbers are devastating," says national trends expert Michael G. Zey, PhD, a professor at Montclair University. "They show this so-called economic recovery has been tepid. In a true recovery, we would be adding more than 200,000 jobs per month, and bringing back some of the 8 million jobs lost since 2007."
But how can the number of jobs added be so low, especially since the Department of Labor also announced today that in October 172,000 jobs were added? That's a revised number up from 151,000. You may have also heard reports that 600,000 holiday jobs were opening up. Well, the November numbers released today have been what they call "seasonally adjusted" and don't include most of the part-time, temporary positions.
That's not to say that the abundance of seasonal work won't have a positive effect on the economy, however. Even part-time jobs increase people's spending power, and that increases profits for the companies doing the hiring.
A glum immediate outlook
Still, unemployment numbers might get worse before they get better, explains Dan Finnigan, president & CEO of Jobvite, a social recruiting software company. People traditionally stop looking for work during the holidays, and therefore drop off the radar. When they start looking again in January, the number of unemployed people seems to increase.
But Finnigan believes that in January job seekers won't just be looking, they will be finding. Right now, he says, most companies are devising their budgets for the upcoming year, and they won't be hiring until the first or second quarter. Corporate America has been sitting on huge amounts of capitol, and has been "reluctant to add to the payroll until they see how the recovery is going," he says. "They've been squeezing as much as they can out of their current work forces, but should finally open up next year. They'll say, 'Enough! it's time to hire more people!'"
Zey points out that profits are indeed up at some companies, but that's because of company wide cost-cutting, which includes layoffs. They're not actually making more, they're just spending less.
Harry Holzer, professor of public policy at Georgetown and author of the soon-to-be-published 'Where are All the Good Jobs Going?: What National and Local Job Quality and Dynamics Mean for Workers,' adds that while productivity in America is up, that's not going to necessarily create more jobs. "Doing more with less looks good on the corporate bottom line, but not on the bottom line of the American worker," he says.
So what can we do about it?
The answer, according to Zey is in increasing production. "America needs to become a nation of producers again, not the nation of consumers which we have become. We need to increase our manufacturing base." He points out that the financial industry is thriving again, "but we can't all be bankers." The manufacturing sector actually lost 13,000 jobs last month.
Zey feels policy makers should be focusing on areas with much growth potential, such as energy development. "It's quick, and the most logical," he says. He believes that instead of importing energy from foreign sources, we should be expanding on what we have right here within our own borders. And he believes the government is restricting that development, rather than encouraging it.
"I do see a way out of the current situation," says Zey. "But it will require a revolution in policy making and will require take great courage. Tax cuts alone won't help."
And on the political front, today's disappointing rise in unemployment numbers is expected to nudge legislators toward extending and retaining the Bush-era tax cuts, all of which have been the subject of much debate.
"The important thing to remember," according to Georgetown's Holzer, "is that you should never place too much weight on any one month's numbers. Last month the numbers were much better, and there may have been a little too much euphoria. Just remember, this is only one month. Things will change again next month."
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- Unemployment Rate Climbs to 9.8% as Job Growth Slows [DailyFinance]
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- 2 Million Losing Unemployment Benefits in December [AOL Jobs]