US jobless rate hits 26-year high

CHICAGO TRIBUNE

WASHINGTON — The U.S. unemployment rate edged closer to a milestone 10 percent in September, but that only began to measure the miserable reality confronting America’s work force.

Last month’s jobless rate, reported Friday by the government, rose to a 26-year high of 9.8 percent — up from 9.7 percent in August. Private and public employers cut a total of 263,000 jobs, far worse than analysts had expected, raising fresh concerns about the nation’s ability to sustain the budding economic recovery.

But in addition to the 15.1 million people counted as officially unemployed, the U.S. Labor Department said, another 9.2 million workers last month were relegated to part-time work because their employers had scaled back their hours or they simply could not find full-time jobs.

Friday’s report showed that employees on average put in just 33 hours of work a week last month, a record low.

Employees with reduced hours are counted as marginally attached workers, along with people so discouraged that they have quit looking for jobs. When these workers are added to those who have no jobs, the Labor Department said, the broader measure of the unemployed and the underemployed stood at 17 percent in September.

This figure is significant not only because of the picture it paints of the hardships many workers face, but also because of what it suggests about the future — and the picture isn’t pretty.

Most government officials and outside economists believe the economy technically has entered a recovery; that is, the economy has stopped shrinking and begun to grow again. But many of these same experts are predicting a long period of high unemployment, plus stagnant wage growth for workers who do have jobs.

One contributing factor in this dismal prognosis is the large pool of involuntary part-time workers.

By having their hours and work weeks shortened, they have experienced sometimes-sharp reductions in income. That means a corresponding loss of purchasing power — an indirect loss for the country as a whole because consumer spending now accounts for some 70 percent of GDP.

And for the future, many economists say that even if the prospect of recovery encourages businesses to step up production, many are likely to begin by restoring the hours of workers who were cut back — instead of hiring new workers.

“When the economy starts to recover, firms can expand quite a bit without adding new workers,” said David Card, a labor economist at the University of California-Berkeley.

And many employers aren’t done ratcheting back work hours — or days.

Media General, a communications outfit based in Richmond, Va., told its employees in February to take 10 days off without pay because of the tough business situation. Last month the company added five more days between September and December.

In Wichita, Kan., workers at jet maker Hawker Beechcraft will be taking additional, unpaid days off around Thanksgiving and Christmas. Spokeswoman Nicole Alexander wouldn’t comment about next year’s plans. “I don’t know if it’s safe to say things have stabilized,” she said.

Shannon Robinson, of Kihei, Maui, found out Thursday that her 40 hours of work a week as office manager at a small real estate company were being cut in half — taking a big chunk out of her $45,000-a-year salary.