July 2, 2009 (Jobs Byte)
Economy Loses 467,000 Jobs In June, Unemployment Edges Up to 9.5 Percent
By Dean Baker
July 2, 2009
Unemployment among men is near its all-time high on record.
The economy shed another 467,000 jobs in June, as the unemployment rate edged up to 9.5 percent. The rise in unemployment would have been higher except 155,000 people left the workforce, pushing down the employed percentage of the population (EPOP) by 0.2 percentage points to 59.5 percent. This is a drop of 3.9 percentage points from the pre-recession high in December of 2006.
Unemployment in this downturn continues to be overwhelmingly a male story. The unemployment rate for men rose to 10.0 percent, just 0.1 percentage points below its all-time high in December of 1982, the highest on record since World War II. The EPOP for men fell by 0.5 percentage points to 67.5 percent, the lowest rate ever. By comparison, the unemployment rate for women edged up 0.1 percentage points to 7.5 percent. The EPOP for women fell to 56.4 percent, 2.0 percentage points below the pre-recession peak.
All the other data in the household survey was consistent with further weakening of the labor market. The average and median duration of unemployment spells both rose sharply, increasing by 2.0 and 3.0 weeks, respectively. The percentage of the unemployed who have been out of work for more than 26 weeks increased by 2 percentage points to 29.0 percent. Many of these workers will soon be exhausting even their extended unemployment benefits.
The percentage of the unemployed who voluntarily left their jobs fell by 0.6 percentage points to 5.6 percent, a record low. This measure of confidence in the labor market bottomed out at 6.5 percent in the 1981-82 recession.
The rate of job loss in the private sector appears to have slowed somewhat in the last two months, shedding 312,000 jobs and 415,000 jobs in May and June, respectively. This compares with average private sector job loss of 660,000 per month from October through April. However, the situation is somewhat more ambiguous from the standpoint of hours worked.
The index of aggregate weekly hours fell by 0.8 percentage points in June, the same as the average rate of decline from October to April. This index is now down 8.2 percent from its pre-recession peak. This is the equivalent of almost 9.5 million private sector jobs lost in the absence of a decline in hours worked.
Job loss continues to be heavily concentrated in construction and manufacturing, which lost 79,000 and 136,000 jobs, respectively. All sectors of construction are now shedding jobs as job loss in the non-residential sector is partly offsetting a slower rate of job loss in the residential sector. Nonetheless, the rate of decline has slowed from earlier this year when the sector was shedding almost 120,000 jobs a month. Manufacturing had been losing over 170,000 jobs a month in the October to April period.
Retail trade lost 21,000 jobs in June, with half of the loss coming in car and part dealers. This compares with job loss of more than 60,000 per month earlier this year. However, it is worth noting that over the last three months, the birth/death model has imputed an average of 39,000 more jobs a month into the establishment data than in the corresponding months of 2008. Given the weakness of the economy, this increase seems implausible. The imputation is especially important for retail where small firms are constantly entering and leaving the market.
Health care remains the only sector adding jobs, increasing employment by 20,800. Cutbacks in state and local spending are likely to hit health care soon, but thus far the sector continues to generate jobs at a healthy pace.
Another source of bad news in this report was the flat nominal wages reported for June, coupled with a small downward revision for May. The flat nominal wages, coupled with the decline in work hours, led to a 0.3 percent decline in the nominal weekly wage. The combination of declining employment, declining real wages for those still working, and the continuing loss of housing wealth at a rate close to $200 billion a month, virtually guarantees further declines in consumption in the months ahead. With state and local governments planning layoffs and furloughs in response to deficits, there is little basis for optimism about the second half of 2009.
Dean Baker is the Co-director of the Center for Economic and Policy Research. CEPR's Jobs Byte is published each month upon release of the Bureau of Labor Statistics' employment report. For more information or to subscribe by fax or email contact CEPR at 202-293-5380 ext. 102, or chinku [at] cepr [dot] net.