STATEMENT BY CHAD STONE, CHIEF ECONOMIST,
ON THE SEPTEMBER EMPLOYMENT REPORT
Today’s employment report is a reminder that the
economy’s troubles run deeper than the financial market distress that is
monopolizing the headlines. Enacting the
financial rescue plan
before the House today is vital to reduce the risk of financial meltdown and an
ensuing economic contraction more severe than any since the 1930s. But enacting
the plan will not by itself get the economy out of its current slump or help
workers who have not been able to find a job in the current weak labor market.
Congress can and should do more. A good place to start is with the one
million-plus jobless workers who will exhaust their unemployment benefits by
year-end unless Congress provides additional weeks of benefits before
adjourning.
September was the ninth straight month of job
declines, with employers shedding a net 760,000 jobs so far this year (nearly a
million jobs have been lost in the private sector). The official unemployment
rate was 6.1 percent in September, and other indicators show even greater labor
market weakness. The percentage of the population with a job (62.0 percent) has
not been lower since 1993. The Labor Department’s most comprehensive alternative
unemployment rate measure — which includes people who want to work but are
discouraged from looking and people working part time because they can’t find
full-time jobs — stood at 11.0 percent in September, its highest level since
April 1994. In addition, more than 1 in every 5 of the 9.5 million unemployed
have not been able to find a job despite looking for 27 weeks or more.
Signs that the economy is weakening are
everywhere. The effects of the first economic stimulus package appear to have
run their course; consumer spending (which is over two-thirds of GDP) was anemic
in August, pointing to the possibility of a decline in personal consumption
expenditures this quarter for the first time since 1991. Auto sales are
plummeting, and the ISM manufacturing index, which had been signaling only a
mild contraction, suffered its largest decline since 1984 in September. As
today’s jobs report shows, the labor market is particularly weak. Claims for
unemployment insurance are approaching 500,000, their highest levels since late
2003.
At the end of June, policymakers enacted an
additional 13 weeks of unemployment insurance (UI) benefits for workers
exhausting their regular benefits. Workers who began to receive benefits in July
will exhaust them this month. The National Employment Law Project estimates that
nearly 800,000 workers will exhaust their extended benefits in October and over
350,000 more will exhaust theirs in November and December. Both houses of
Congress have legislation before them to add additional weeks to the temporary
extended benefits program. Ideally, Congress should pass this as part of a more
comprehensive economic stimulus package. Barring that, lawmakers should pass the
stand-alone legislation before adjourning.
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