More bad news

The economy lost another 89,000 jobs in January as layoffs in manufacturing and construction continued. However, because of an implausible decline of 924,000 in the civilian labor force, the number crunchers at the Bureau of Labor Statistics (BLS) were able to report that the January unemployment rate had fallen two-tenths of a percent from December levels.

Jared Bernstein, senior economist at the Economic Policy Institute (EPI), said the January BLS report masks weaknesses in the factors that underlie the labor market.

In its monthly critique of the report, EPI said such a large fall in labor force participation – the total number of employed and unemployed workers – is indicative of the fact that the labor market “is not growing out of recession” but, rather, that discouraged job seekers are giving up or not beginning to search for jobs.

Bernstein said other trends run counter to rosy predictions that economic recovery was underway: a decline in average working hours, a flat wage growth and an increase in the duration of periods of unemployment. The employment rate, which Bernstein calls a “broad measure of labor demand,” fell to its lowest level since the summer of 1994 and stood at 62.6 percent in January. This measure of labor demand is now 2.2 percentage points below its peak in April 2000. The employment rate for African Americans and Latinos is down 2.6 points and 3.1 points for African-American women.

EPI said the decline in the length of the average workweek – and with it a decline in weekly earnings – is a significant measure of economic recovery. As a rule, employers increase the hours of workers who remain in the payroll rather than rehiring laid-off workers in the early stages of a recovery. The January report is clear indication that this is not happening, dampening the enthusiasm of many pundits who claimed the economy began to grow in the last quarter of 2001.

AFL-CIO President John Sweeney said the report, showing that one in ten workers wants work and cannot find it, “was more bad news” for workers. Sweeney said that when it comes to helping workers, although President Bush “talked the talk” in his State of the Union address, he cannot be counted on to “walk the walk.”

“President Bush and Congress must act now to provide real economic security for America’s working families,” Sweeney added.

Data from the Department of Labor that show the number of workers exhausting their regular unemployment insurance benefits without qualifying for additional benefits are equally discouraging. An analysis of these statistics by the Center for Budget Policy and Priorities (CBPP) says nearly 860,000 workers exhausted their unemployment benefits in the fourth quarter of last year, with some 300,000 workers exhausting their regular unemployment insurance benefits in December. This represented an increase of 75 percent over year-earlier levels and was the largest December decline since record-keeping began in 1973.

In nearly three-quarters of the states, the number of workers exhausting benefits in the fourth quarter of 2001 was at least 50 percent greater than the number exhausting benefits in the fourth quarter of 2000. In California alone, 132,000 workers exhausted their unemployment benefits in the last three months of 2001. Some 69,000 Texans suffered the same fate.

Even more troubling is the fact that at the time these workers exhausted their regular unemployment benefits, no state provided additional weeks of assistance. By comparison, the number of workers who exhausted their regular unemployment benefits but did not qualify for additional benefits was 246,000 in December 1981.

A study released by the CBPP on Feb. 6 predicts that two million more workers will exhaust their benefits before July 1. So far only two states – Washington and Oregon – have reached their state “triggers” for providing “extended unemployment benefits.” As of Jan. 6, both these states provided an additional 13 weeks of benefits to workers whose regular unemployment insurance benefits have run out. CBPP says that in most states unemployment is unlikely to reach the state’s trigger for providing extended benefits in the months ahead, even if the unemployment rate continues to rise.