247,000 jobs lost: Without recovery package, would be far worse

Original source:

U.S. jobs lost in July totaled 247,000, according to U.S. Bureau of Labor Statistics data out today, with the unofficial unemployment rate now at 9.4 percent compared with 9.5 percent in June, the first improvement in the pace of job loss since June 2008.

The July jobless rate, while much better than economists predicted, still means 14.5 million U.S. workers are without jobs. And if the underemployed or those who want a job but have given up looking are counted, the broader U.S. unemployment rate stands at 16.3 percent, more than 25 million Americans who need jobs or full-time work but cannot find it. Jobs were lost in all sectors, except for education, health care, leisure and government, which all experienced small gains.

More frightening, the July job figures would have been far worse without the economic recovery package, which has helped to slow the pace of job loss to less than half of what it was just six months ago. From May to July, job losses averaged 331,000 per month, compared with losses averaging 645,000 per month from November to April.

Economic Policy Institute (EPI) economists say the economic recovery program already has saved or created some 750,000 jobs. Plus, says John Irons, EPI director of research and policy, the gross domestic product (GDP) report last week showing GDP shrunk far less in the second quarter of this year (-1 percent) than the first quarter (-6.4 percent).

But the depth and duration of the nation’s economic crisis that resulted from eight years of the Bush administration and economic imbalances that took years to form will not be solved quickly—or with one shot in the arm of economic stimulus.

EPI economist Heidi Shierholz and other economists predict the jobless rate will reach 10 percent by the end of this year or in early 2010. Those with jobs are putting in far fewer hours than a year ago, so as the economy improves, the first move employers will make will be to increase hours, not hire new workers. Says Shierholz:

The fact that we’ve seen this dramatic new decline in jobs means employment will be long in coming because employers have a lot of hours to fill.

Worse, there are now 5 million long-term unemployed workers, the worst such figure in any recent recession. There are 5.7 workers looking for every one job available. EPI Director of Research and Policy John Irons predicts that the effects of the economic stimulus package will begin to wane in mid-2010, when the U.S. jobless rate will still be bad. EPI economists say today’s jobless data point to two urgent actions Congress must take: Extend unemployment insurance and pass a second round of economic stimulus.