Unemployment reaches highest level since 1994

November 08, 2008|By Hanah Cho | Hanah Cho,hanah.cho@baltsun.com

The nation's unemployment rate climbed to a level not seen since 1994 as employers cut 240,000 more jobs last month, signaling that the economy is heading into further distress.

The jobless rate rose to 6.5 percent from September's 6.1 percent, the Labor Department said yesterday. And many economists warn of more job losses and grim economic conditions, portending a protracted recession.

"The question is: How deep and how long?" said Robert Dye, a senior economist with PNC Financial Services Group in Pittsburgh.

"If you look at the economic data that I've been seeing for the last month or two, in my career as an economist, it ranks as the worst months for economic data that I've seen in about 20 years."

President-elect Barack Obama called on Congress yesterday to extend unemployment benefits and pass another economic stimulus bill before or just after he takes office.

Even in Maryland, which has held up better than the country overall, the unemployment rate has been steadily rising - from 3.5 percent in January to 4.6 percent in September, the most recent figure.

The state is seeing the impact of the financial sector's meltdown, credit problems and plunging consumer spending.

Legg Mason Inc., the Baltimore money management giant, began what is expected to be a broader set of job cuts last week by cutting a third of the 147 employees at its Legg Mason Capital Management unit.

Boscov's is closing all three of its mall-anchor department stores in the Baltimore area as part of its bankruptcy reorganization, eliminating 394 jobs.

Circuit City is closing 20 percent of its more than 700 stores, including three in Maryland, and consumer-electronics chain Tweeter filed for bankruptcy protection and is closing its stores, including seven here.

Automaker Chrysler is shutting its Newark, Del., sport utility vehicle plant earlier than planned; the job losses include 250 people who live across the border in Cecil County.

Weathering the storm

Still, some experts believe Maryland could weather the economic turmoil better than other states because of its proximity to Washington and the region's health care and education labor base.

"We're very concerned about where we are and where the country is right now," said David W. Edgerley, secretary of the state Department of Business and Economic Development.

"We have to be pleased with the way Maryland is weathering the storm and the way we think we'll come out of the storm earlier than most states."

Since January, the U.S. economy has lost 1.2 million jobs. More than half of that decline occurred in the past three months.

The nation's unemployment rate is up from 4.9 percent at the beginning of the year.

In October, job cuts continued in manufacturing, construction and financial services. A few bright spots were in government, education and health care.

The number of unemployed U.S. workers jumped in October by 603,000 to 10.1 million. And 22.3 percent of all unemployed people have been out of work for six months or longer, according to the Labor Department.

For those already out of work, the influx of newly unemployed workers makes finding a job that much more difficult.

'Worst time in history'

Charlie Makowski, 59, an appraiser who worked as a real estate auctioneer for a decade, lost his job 18 months ago.

He has managed to pay his mortgage and other expenses with the help of unemployment insurance but has mostly relied on his savings.

The Dundalk resident was already at a disadvantage compared with younger workers who are more technologically proficient and know how to search for jobs online.

A truck driving job lasted just five weeks over the summer before he was laid off.

"I had no knowledge of the job market because for 32 years I had jobs and had run a business, and it was all about real estate," Makowski said. "This is the worse time in the history of the country to get a job. Everyone is laying off."

He's taking computer and other classes in hopes of landing a federal job with the Department of Veterans Affairs, betting that a government job will bring the stability that has vanished from the real estate industry.

Many economists expect the jobless rate to climb to 8 percent, possibly higher, next year. In the 1980-1982 recession, the unemployment rate rose as high as 10.8 percent.

Dye, the economist at PNC, said the latest monthly snapshot of unemployment shows how troubled the economy is.

"Across the entire gamut of indicators, it's very difficult to find something that points in a positive direction. Gasoline prices being one. ... You can't get much beyond that," he said.

"If consumers don't have jobs, falling gasoline prices are a release, but they're not going to pull us out of this with the job market so weak."

Retail sector in Maryland

Tom Saquella, president of the Maryland Retailers Association, said he hasn't heard of retailers laying off in Maryland unless they're going out of business.

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