Jobless rate at 10.2 percent, and it's likely to stay high for months to come
Let's begin with Wall Street. Recent economic releases have resulted in volatile swings on the Big Board. Good news, such as a batch of positive economic data on Thursday, has brought rallies, and bad news has sent shareholders into a selling frenzy. But those sudden gains and falls largely happened on unexpected news. Friday's jump in unemployment was higher than expected, and positive stock futures quickly beat a retreat this morning, moving lower at about 8:45 a.m. Eastern Time.
For people looking for work, the October data simply reaffirm what they already knew: Lots of people are out of work, and more have joined the jobless rolls.
"We know unemployment is high, and it's not likely to go down anytime soon," says John Challenger, chairman and chief executive at Challenger, Gray & Christmas, an employment-services firm. If there's one bright spot, it's that the rate isn't likely to rise much higher, hovering around 9 to 10 percent for some time.
A Long Lag Time
There's precedent for unemployment rates staying stubbornly high even after economic recovery begins. Economists largely believe the economy began growing sometime during the third quarter after some 19 months of contraction. Following recessions in the early 1990s and 2001, job creation lagged economic turnaround by 15 to 19 months, Challenger says. Given the depth of the recent recession, it's likely to take at least as long -- if not longer -- for job growth to return.
The high probability of sustained high unemployment rates was one impetus behind passage of a bill this week in Congress that extends jobless benefits by up to 20 weeks in hard-hit states. President Obama is due to sign the legislation Friday morning.
That legislation appears more important now than yesterday, given how wide-ranging the job losses were. In October, services and manufacturing both cut 61,000 jobs, construction employment fell by 62,000, and retail shed 40,000 jobs. Health care and education, which has been a solid job growth area over the past year, added 45,000 jobs. Professional services increased by 18,000 positions.
Also, a separate unemployment gauge, which includes workers who can find only part-time work and "discouraged workers," rose to a record 17.5 percent in October from 17.0 percent in September and 16.8 percent in August. In addition, total hours worked declined 0.2 percent, and the average workweek was essentially unchanged at 33.0 hours. Average hourly earnings rose 5 cents to $18.72.
Cheaper to Hire, Easier to Cut
Though many people pay keen attention to the overall unemployment rate, Friday's jobs report contains other data that provide better insight into where the economy is likely headed. One of those is the number of temporary workers employers are hiring to keep up with increased demand for their products or services, says Christy Caridi, director of the Bureau of Economic Research at Marist College in Poughkeepsie, N.Y.
Such workers aren't given benefits and thus are cheaper to employ. They can also be easily cut. "Increases in temporary hires is usually the beginning of the correction in the labor market," Caridi notes. Friday's report showed an increase of 34,000 in the number of temporary workers hired in October.
As important is the percentage of people who have taken part-time work, in lieu of full-time employment, she says. "You have a lot of people who have taken part-time employment, who are considered employed now," Caridi points out, but haven't yet found jobs that can pay them a livable wage.
The Labor Department report showed the number of people working part-time for economic reasons, sometimes referred to as involuntary part-time workers, was little changed in October at 9.3 million. All told, the worse-than-expected unemployment news drives home the fact that even if the recession is officially over, for millions of Americans that day is still a long way off.
With additional reporting by Joe Lazarro