- The Washington Times - Saturday, August 2, 2008

Unemployment jumped to a four-year high of 5.7 percent last month, continuing its steep run-up this year as the economy steadily bled jobs, the Labor Department reported Friday.

Jobs dropped by another 51,000 in manufacturing, construction, retailing and temporary employment, adding to a string of losses that totaled 463,000 since January.

One area where job gains previously held up — information technology — succumbed to the trend last month with the loss of 13,000 positions. Only health care, mining, education and government continued to see healthy job growth.

Deep slumps in housing and auto production have caused a rout in factory and construction employment in the past year. Construction jobs have plummeted by 557,000 since peaking nearly two years ago at the height of the housing boom — with most of that loss posted since October — while manufacturing jobs dropped by 383,000 in the last year despite a major boom in exports, the department said.

In perhaps the most telling sign of the economy’s weakness, the overall workweek fell to a four-year low of 33.6 hours during the month. And the growth in average weekly wages dropped below 3 percent — suggesting that incomes during the month fell further behind the 5 percent rate of inflation.

“The details are rather ugly,” said Harm Bandholz, an economist with Unicredit Markets. “This is a truly recessionary employment report” because of the nearly across-the-board decline in jobs and incomes, and the sharp rise in unemployment from below 5 percent at the beginning of the year. The latter is a particularly alarming development, he said, because it almost never occurs unless the economy is in recession.

While the decline of jobs has been steady all year — averaging between 50,000 and 60,000 a month — it has not accelerated as many on Wall Street had feared it might after the department reported a surge in jobless claims on Thursday. Stocks fell a modest 51 points in the wake of the jobs report Friday, reacting as well to news of staggering losses at GM and big sales declines at other automakers.

The consistent-though-unspectacular dribble of monthly job losses since the beginning of the year, coupled with the drop in hours worked, indicates “the economy is in recession,” said Sung Won Sohn, economics professor at California State University. He noted recent job cuts announced by GM, Wachovia, Starbucks, Linens and Things and Bennigan’s.

“Job cuts are becoming fashionable in America,” he said.

The declines in jobs and inflation-adjusted incomes are two of four major economic trends that an academic committee in Boston considers in determining whether the United States is in a recession. The National Bureau of Economic Research has not as yet published an opinion on the matter, but many economists believe the relentless job and income losses will soon move it to declare that a recession began around the beginning of the year.

Much of the dramatic increase in unemployment has been since the spring among teenagers, many of whom in past years shunned work to stay in school. The credit crunch has made it harder to get loans for college, and high gasoline prices are forcing many to seek income to supplement the family wage earners.

More than one in five teenagers reported being out of work last month, up from 16.8 percent at the beginning of the year. Mr. Sohn said the trouble these unexperienced and unskilled workers are having is symptomatic of the broader economic slump.

But nearly every other category of worker also has seen smaller rises in joblessness, including adult men and women and blacks. Only Hispanic workers enjoyed a drop in unemployment last month to 7.4 percent from a high of 7.7 percent in June.

Peter Morici, University of Maryland business professor, said the difficulties facing teenagers are similar to those facing manufacturing and construction workers who lose jobs.

“For high school graduates without specialized technical skills or training and for college graduates with only liberal arts diplomas, jobs offering good pay and benefits remain tough to find,” he said.

“Historically, manufacturing and construction offered workers with only a high school education the best pay, benefits and opportunities,” he said. “Troubles in these industries push ordinary workers into retailing, hospitality and other industries where pay often lags.”

But even lower-paying jobs in retail and restaurants are getting harder to find, according to the jobs report. Retail jobs have fallen by 211,000 since March 2007, and last month restaurants stopped adding workers for the first time this year.

The decline of one-time bright spots like restaurant work is a “worrying sign,” said David Madland, analyst at the Center for American Progress, a Washington think tank. He noted that another important bellwether of the job market - temporary employment - has been flashing warning signs all year.

“Temporary employment has now fallen for 18 of the past 19 months, the worst performance of the sector since 1990,” when the departments first started tracking temp jobs, he said. That is “alarming,” he said, because changes in temporary jobs presage changes in the broader work force, with companies typically laying off temporary workers before they start laying off their full-time staff.

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