- The Washington Times - Friday, November 6, 2009

The nation’s unemployment rate soared to 10.2 percent last month as the economy lost another 190,000 jobs, the Labor Department reported Friday morning.

The latest in the worst string of monthly job losses in modern times brings the total of jobs killed during the recession to 7.3 million. While October saw another big crop of job losses, the pace of layoffs has been slowing since the beginning of the year, when more than 600,000 workers lost their jobs each month, the department said.

Every group from teenagers to minorities and adults experienced job losses, propelling the unemployment rate above 10 percent for the first time in 26 years. But the joblessness has been particularly pronounced among adult men, whose unemployment rate jumped to 10.7 percent while unemployment among women was significantly lower at 8.1 percent.

Nearly every sector lost jobs, although layoffs slowed some in manufacturing and construction. Health care continued to stand out as the only sector adding jobs, with a 29,000 increase in October giving the profession a job gain of nearly 600,000 during the recession.

Temporary jobs in business services ticked up by 34,000 in October, in what many economists consider a harbinger of an improving job market. Employers often add temporary workers before they hire full-time staff, if they are unsure whether an increase they are experiencing in demand will be temporary or permanent.

Evidence of a pick-up in activity at factories in particular has grown in recent weeks, and the jobs report showed that manufacturing hours and overtime both rose during the month as factories strived to fill orders.

But wages remain severely depressed. Average hourly earnings are up by only 2.4 percent in the past year, and when cuts in hours at many businesses are taken into account, that trimmed weekly take-home pay to a 0.9 percent gain in the last year.

The anemic growth in incomes is a major reason consumers continue to pull back and refrain from spending — a factor that endangers the economy’s fragile recovery.

“Companies’ reluctance to hire is the main impediment to a self-sustained recovery,” said Harm Bandholz, economist at Unicredit Markets. “Without higher real incomes, households won’t be able to increase their expenditures enough to ensure such an upswing.”

Besides hiring temporary workers and cutting hours to save on labor costs, employers also are asking considerably more of their current workers to get through the tough times. The result was a stunning 9.5 percent increase in productivity during the summer quarter — the biggest gain in six years.

“It appears that many firms have realized that they can meet demand with a much smaller headcount,” Mr. Bandholz said. “Instead of hiring again, they prefer to use the resulting productivity gains to bolster their balance sheets. The surveys among small businesses suggest that they are not inclined to sacrifice this ‘new efficiency’ any time soon.”

“The tough question is just how far companies can push their remaining workers before they decide that they simply must bring in new staff,” said Nigel Gault, economist with IHS Global Insight.

“We expect productivity growth to slow sharply, and that firms will have to rehire sooner after this recession than after the 2001 one,” because they cut jobs so sharply in the last year, he said.

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