On Friday, December 5, 2008 the U.S. Department of Labor reported a sharp loss of 533,000 jobs in the month of November. The shocking figure calculates as the worst reading since the gruesome 1973-1974 recession and follows revised declines of 403,000 and 320,000 for September and October, respectively.
According to the National Bureau of Economic Research, today's recession began at December 2007. Friday's report is a significant indicator that this commercial debacle, originating with a housing bust that reverberated through credit markets has now debilitated the able-bodied worker. Indeed, labor and the consumer represent the final shoes to plunge into the abyss.
The unemployment rate has increased to 6.7% with the Labor Department identifying 10.3 million persons as unemployed. Alarmingly, 2.2 million of these hapless Americans have been out of work for at least seven months. The report indicates that the U.S. jobless ranks has increased by 2.7 million people, elevating the unemployment rate by 1.7% during this recession.
We must indicate that these numbers are misleading and under represent the true damage. The statistics do not include the underemployed or the legions of exasperated job seekers that have simply given up all hope in regards to any job search. The horde of part-time workers, involuntarily settling for minimal wages of any sort has been estimated to total 7.3 million - an increase of 2.8 million over 2007 levels.
608,000 discouraged citizens have thrown in the towel in frustration - refusing to waste additional resources participating in what appears to be a lost cause of finding work. This pool of labor, defined as 'marginally attached' has not actively sought employment over the prior four weeks and is not included within the aforementioned unemployment figures.
Logically, the U.S. population is carrying a total of 18.2 million unemployed, underemployed, and cynically hopeless individuals. 12% of the 154,616,000 civilian labor force, at least one in ten Americans is wanting for work.
The job losses have accelerated over the past ninety days, ravaging all industries outside of education, health, and government. Our manufacturing, construction, financial services, and retail sectors have proven to be especially susceptible to the fallout.
America's well-documented firm embrace of a service-model economy continues to batter the once proud Steel Belt into submission, converting large swaths of the Upper Midwest into an industrial wasteland; whereas construction payrolls have been compromised by the housing bust - precipitated the collapse of viable credit and therefore financial services.
Retailers, correctly rationalizing that the beleaguered U.S. consumer will forego his typical spendthrift machinations have slashed hours while dismissing seasonal hiring of any sort. The predicament is manifest in a spectacular 20% unemployment rate for teenagers actively pursuing employment. The cryptic scenario further highlights October's pitiful retail sales report courtesy of the U.S. Department of Commerce.
Interestingly, Americans fortunate enough to have secured employment have enjoyed a steady 3.7% rise of hourly wages to $18.30 that translates into $613.05 of weekly earnings.
We must speculate that this one silver-lining glimmer of hope has already been destroyed by the elevated housing and energy costs that marked the tail end of this credit bubble. Certainly, $2,400 of monthly income will quickly evaporate towards zero in the wake of taxation, fuel costs, rent, and utilities.
Sadly, Americans are scrounging for whatever spare coinage that remains lodged beneath the seat cushions in order to remit payment towards picked-over and discarded table scraps.
Wall Street does not seem to mind. The Dow Jones Industrial Average surged by 630 points, a 7.6% advance to 8,934 in the two trading days following the release of this report.